Direct method

Reciprocal method

The managers of Ashtabula Manufacturing are discussing ways to allocate the cost of service departments, such as Quality Control and Maintenance, to the production departments. To aid in the discussion, the controller provided the following information: Quality Control Maintenance Machining Assembly Direct dept. costs $350,000 $200,000 $400,000 $300,000 Budgeted MHs 50,000 Budgeted DLHs 25,000 Budgeted Hrs. of Service: Quality Control 7,000 21,000 7,000 Maintenance 10,000 18,000 12,000 Required: Determine the amount of Quality Control and Maintenance costs that would be allocated to the Machining and Assembly departments using: 1. Direct method 2. Reciprocal method