Leander Mfg. has three support departments (human resources, administration, and maintenance) and two revenue-generating departments (assembly and finishing). The company uses the step method to allocate support department costs to operating departments. In October, human resources incurred $432,000 of costs, administration incurred $669,600, and maintenance incurred $204,000. Proportions of services provided to other departments for October follow.
Human Resources Administration Maintenance
Human resources 10% 5%
Administration 10% 15
Maintenance 15 10
Assembly 40 50 45
Finishing 30 30 35
a. Assume that the departments are listed in a benefits-provided ranking.
1. What amount of cost should be assigned from human resources to each of the other departments?
2. What amount of cost should be assigned from administration to each of the other departments?
3. What amount of cost should be assigned from maintenance to each of the other departments?
Answers: 3
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Leander Mfg. has three support departments (human resources, administration, and maintenance) and tw...
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