Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and...

 

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Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering .. -0- 50% -0- 10% BA 40% Administration ... 20% -0- 10% 50% 20% Maintenance -0- 20% -0- 30% 50% Direct cost..... $36,000 $171,000 $45,000 $315,000 $90,000 Required Allocate the service department costs to the two operating departments using the reciprocal method. (Hint: You do not need to use a computer or study the Appendix in this chapter.) Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering .. -0- 50% -0- 10% BA 40% Administration ... 20% -0- 10% 50% 20% Maintenance -0- 20% -0- 30% 50% Direct cost..... $36,000 $171,000 $45,000 $315,000 $90,000 Required Allocate the service department costs to the two operating departments using the reciprocal method. (Hint: You do not need to use a computer or study the Appendix in this chapter.)

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