Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 23

Allocating Service Department Costs First to Production Departments and Then to Jobs

Refer to the facts in Exercise 11-22. Assume that both Building A and Building B work on just two jobs during the month of June: RW-12 and RW-13. Costs are allocated to jobs based on labor-hours in Building A and machine-hours in Building B. The number of labor- and machine-hours worked in each department are as follows:

		Building A	Building B
Job RW-12:	Labor-hours	160	20
	Machine-hours	20	40
Job RW-13	Labor-hours	20	20
	Machine-hours	20	180

Required

How much of the service department costs allocated to Building A and Building B in the direct method should be allocated to Job RW-12? How much should be allocated to Job RW-13?