Therefore these costs must increase at a rate of 20

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Unformatted text preview: _______________________________________________________________ David W. Young • Management Accounting for Managers • Chapter 1 Page 23 Copyrighted Material. Do not reproduce without written permission. To complete the reciprocal allocation, we remove $1,738 from administration and allocate it to the remaining three cost centers on the basis of labor hours, and we remove $2,690 from maintenance and allocate it to the three other cost centers on the basis of square footage. The result is that the service center costs are fully allocated to both the other service centers and the production centers, and the full $9,100 in costs now resides only in the production centers. These allocations are shown in Exhibit A2. _________________________________________________________________________________________________________ Exhibit A2. Allocation of Service Center Costs to Mission Centers Initial costs ($000) Maintenance allocation (1) Administration allocation (2) Total costs Administration $1,200 538 (1,738) -- Maintenance $2,400 (2,690) 290...
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This document was uploaded on 03/30/2014.

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