A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the ser- vice departments. The production departments are Assembly and Machining. The followwing data have been estimated for next year's operations: Direct labor hours: Floor space occupied: Assembly, B0,000; Machining, 40,000 Factory Office, 10%Assembly, 40% Machining. 50% The direct charges identified with each of the departments are as follows: Building maintenance.... $ 90,000 Factory office.. 171,000 Assembly .... 378,000 Machining 328,000 The building maintenance department services all departments of the company, and its costs are allocated using floor space occu- pied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first. 1.
Extracted text: Direct method and sequential method of distributing service department costs A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the ser- vice departments. The production departments are Assembly and Machining. The followwing data have been estimated for next year's operations: Direct labor hours: Floor space occupied: Assembly, B0,000; Machining, 40,000 Factory Office, 10%Assembly. 40% Machining. 50% The direct charges identified with each of the departments are as follows: Building maintenance.... $ 90,000 Factory office.. 171,000 Assembly ..... 378,000 Machining 328,000 The building maintenance department services all departments of the company, and its costs are allocated using floor space occu- pied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. Distribute the service department costs, using the direct method. Distribute the service department costs, using the sequential 1. 2. distribution method, with the department servicing the greatest number of other departments distributed first.