Unformatted text preview: mn labeled “Maintenance.” The allocations are shown in the dotted line box,
with the $30,000 total at the bottom. As this column shows, the $30,000 in the Maintenance service center has been
allocated to both the Administration service center and the two production centers.
The use of number of machines as the basis of allocation for Maintenance is shown by including the term
“machines” in parentheses at the top of the “Maintenance” column.
With the allocation of the maintenance costs, the Administration service center now has a total of $51,425 to be
allocated, i.e. its $49,425 of direct plus distributed costs, plus the $2,000 of maintenance that was allocated to it.
These amounts are shown in the heavily outlined box in the Administration row (the sum of the two amounts is not
shown). Administration costs are allocated using salary dollars (shown in parentheses at the top of the Administration column), and the shaded box shows the allocation of the $51,425 to the remaining cost centers, i.e., the two
production centers in this case. The total amount allocated...
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- Spring '14
- ........., Boston University School of Management, Crimson Press Curriculum Center, Professor of Accounting and Control