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 Y 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 Y after allocating the Maintenance and Personnel Departments using the direct method?

Quizplus · Accepted Answer

The direct method allocates service department costs directly to production departments without recognizing any service provided between service departments. The total overhead costs for Department Y after allocation are $27,250.

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