Midland Resources has two production departments (Fabrication and Assembly) and three service dep… 1 answer below »

 
   

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Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded:
Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering 0 40 % 0 15 % 45 % Administration 20 % 0 25 % 45 % 10 % Maintenance 0 20 % 0 20 % 60 % Direct cost $ 40,000 $ 254,400 $ 40,000 $ 225,000 $ 80,000

  
Required:

Allocate the service department costs to the two operating departments using the reciprocal method.