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Homework answers / question archive / CJ’s Motorcycle Store has two service departments: Maintenance and Personnel
CJ’s Motorcycle Store has two service departments: Maintenance and Personnel. The maintenance department’s costs are allocated on the basis of maintenance hours. The personnel department’s costs are allocated based on the number of employees. CJ has two production departments: Assembly and Repairs. The following data is provided to you for review: Support Departments Production Departments Maintenance Personnel Assembly Repairs Budgeted costs
| Support Departments | Support Departments | Production Departments | Production Departments | |
| Maintenance | Personnel | Assembly | Repairs | |
| Budgeted cost | $320,000 | $80,000 | $160,000 | $240,000 |
| Budgeted maintenance hours | 800 | 960 | 640 | |
| Number of employees | 40 | 160 | 480 |
Required:
a) Using the direct method, calculate how much of the maintenance and personnel costs will be allocated to Assembly and Repairs, respectively.
b) Using the step-down method, presuming that Maintenance is allocated first, calculate how much of the maintenance and personnel costs will be allocated to Assembly and Repairs, respectively.
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