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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

 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 2010, human resources incurred $360,000 of costs, administration incurred $558,000, and maintenance incurred $170,000.Proportions of services provided to other departments for October 2010 follow.

 

Human Resources

Administration

Maintenance

Human resources

 

10%

5%

Administration

10%

 

15

Maintenance

15

10

 

Assembly

40

50

45

Finishing

35

30

35

a. Assuming that the departments are listed in a benefits-provided ranking, what amount of cost should be assigned from human resources to each of the other departments? From administration? From maintenance?

b. What total support department cost was assigned to assembly in October? To finishing?

c. Explain why the cost allocation is affected by the order in which costs are assigned.

Jun 24 2020 View more View Less

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