Budgeted costs $320,000 $80,000 $160,000 $240,000 Budgeted maintenance-hours NA 1,000 600 400 Number of employees 40 NA 160 480 Using the direct method, what amount of Maintenance Department and Personal Department costs will be allocated to Department A and B

a-1. Maintenance Department Cost allocated to production department A = $192,000

a-2. Maintenance Department Cost allocated to production department B = $128,000

b-1. Personnel Department Cost allocated to production department A = $20,000

b-2. Personnel Department Cost allocated to production department B = $60,000

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf file for the complete question.

The explanation of the answers is now given as follows:

Direct method is a method of cost allocation in which support departments costs are charged directly to the production departments without charging to the other support department.

Based on the above definition, we therefore have:

a. Allocation of Maintenance Department Cost

Total budgeted maintenance-hours of production departments A and B = Budgeted maintenance-hours of production department A + Budgeted maintenance-hours of production department B = 600 + 400 = 1,000

a-1. Maintenance Department Cost allocated to production department A = Maintenance Department Cost * (Budgeted maintenance-hours of production department A / Total budgeted maintenance-hours of production departments A and B) = $320,000 * (600 / 1,000) = $192,000

a-2. Maintenance Department Cost allocated to production department B = Maintenance Department Cost * (Budgeted maintenance-hours of production department B / Total budgeted maintenance-hours of production departments A and B) = $320,000 * (400 / 1,000) = $128,000

b. Allocation of Personnel Department Cost

Total number of employees of production departments A and B = Number of employees of production departments A + Number of employees of production departments B = 160 + 480 = 640

b-1. Personnel Department Cost allocated to production department A = Personnel Department Cost * (Number of employees of production department A / Total Number of employees of production departments A and B) = $80,000 * (160 / 640) = $20,000

b-2. Personnel Department Cost allocated to production department B = Personnel Department Cost * (Number of employees of production department B / Total Number of employees of production departments A and B) = $80,000 * (480 / 640) = $60,000

the answer is the first one: market