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DATA INPUT
USAGE
User of Service HR Maintenance CAD
HR - - -
Maintenance 500 - -
CAD 500 500 -
Machining 4,000 3,500 4,500
Assembly 5,000 4,000 1,500
Total 10,000 8,000 6,000
Budgeted costs in service departments
HR Maintenance CAD
Variable 50,000$ 80,000$ 50,000$
Fixed 200,000$ 150,000$ 300,000$
Total 250,000$ 230,000$ 350,000$
SOLUTION
1. Direct Method
Cost to be allocated Proportion Proportion Amount
HR 250,000$ 4/9 5/9 138,889$
Maintenance 230,000$ 7/15 8/15 122,667$
HR Maintenance CAD Machining Assembly
Costs Prior to Allocation 250,000$ 230,000$ 350,000$ -$ -$
Allocation of HR Department Costs 250,000$ 12,500$ 1/20 12,500$ 1/20 100,000$ 2/5 125,000$ 1/2
Production Departments
Service Departments
Amount
111,111$
107,333$
Provider of Service
Assembly
Machining
Production Departments
