Morris Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y.The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used.The Personnel Department costs of $4,500 are allocated on the basis of number of employees.The direct costs of Departments X and Y are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows:

- What are the total overhead costs associated with Department X after allocating the Maintenance and Personnel Departments using the direct method?

Question

Morris Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y.The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used.The Personnel Department costs of $4,500 are allocated on the basis of number of employees.The direct costs of Departments X and Y are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows:

- What are the total overhead costs associated with Department X after allocating the Maintenance and Personnel Departments using the direct method?

Quizplus · Accepted Answer

The direct method allocates service department costs directly to operating departments without recognizing any service provided between service departments. After allocating the Maintenance and Personnel Departments' costs to Department X, the total overhead costs amount to $31,250.

Morris Manufacturing Company Has Two Support Departments, Maintenance Department and Personnel