X Company has two production departments Machining and Finis

X Company has two production departments, Machining and Finishing. It has two service departments, Maintenance and Technology. The following table shows the number of hours of service provided by the service department to other departments. Using Department Service Dept Maintenance Technology Machining Finishing Maintenance Technology 4,000 4,000 32,000 14,000 2,000 2,000 The Technology Department has costs of $720,000. The Maintenance Department has costs of $108,000 Assume X Company uses the direct method of cost allocation, compute the amount of the Maintenance Department\'s cost that allocated to the Technology Department. If you want to compute (2/9)*63000, multiply 2 times 63000 and then divide by 9. DO NOT multiply $63,000 by .22, Do not enter any dollar signs or commas. For example enter $20,000 as 20000 Save

Solution

When company uses direct allocation method then its means service department cost is directly allocated to production department not other service department.

So in this question maintenance and technology both are service department then maintenance department cost is not allocated to technology department.

So answer is $0