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Unformatted text preview: ________________________________________________________ David W. Young • Management Accounting for Managers • Chapter 1 Page 14 Copyrighted Material. Do not reproduce without written permission. Cost center Maintenance Administration Mowing Special Projects Total Initial Salary Costs $20,000 40,000 50,000 35,000 $145,000 With Supervisor Distribution $ 25,000 (a) 35,000 (b) 50,000 35,000 $145,000 Notes: a. $5,000 added for supervisor; b. $5,000 deducted for supervisor. Determining the allocation rate per salary dollar for administration is somewhat more complicated than it was for maintenance. This is because total costs in the administration cost center have been increased by the amount allocated to it from the maintenance cost center. When we include the allocation of maintenance, the total costs in the administration cost center become $51,425, calculated as follows: Direct plus distributed indirect costs ($54,425 - $5,000 for supervisor) Maintenance allocation Total costs to be allocated $49,425 2,000...
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