Question 3 - Service Departments Costs Allocation - Version A (12 marks) E 1 2 3 5 MF Ltd. has 2 service departments (Accounting and Maintenance) and 2 operating departments (Lawnmower and Weedwacker). MF's management has decided to allocate Accounting costs on the basis of the number of employees, and Maintenance costs on the basis of the service hours used. Below is data concerning MF's current operations: 6 7 Accounting Maintenance Lawnmower Weedwacker 8 Overhead costs $240,000 $310.000 $787,500 $612,500 9 # Employees 5 30 45 10 Service hours 20 480 500 11 2 Required: 1. Allocate the service departments costs to the two operating departments using step-down method. Tie department with higher overhead cost would be ranked first. Show your detailed work. (6 marks) ocate the service departments costs using direct method. (4 marks) Question 3 New... 27 2. Allocate the service departments costs using direct method. ( 4 marks) 2N 30 31 32 33 34 35 36 37 38 39 3. Formulate the Maintenance and Accounting costs under the Reciprocal method. What is the total am 40 (Note: No requirement to do the cost allocation to the operating departments) 41 45 46 47 48 09 End of Question 3 Question 3 New