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, human resources incurred $1,008,000 of costs, administration incurred $1,562,400, and maintenance incurred $476,000. Proportions of services provided to other departments for October follow. Human Resources Administration Maintenance Human resources 10% 5% Administration 10% 15 Maintenance 15 10 Assembly 40 50 45 Finishing 35 30 35 a. Assume that the departments are listed in a benefits-provided ranking. Note: Do not round proportions in your calculations; round your final answer to the nearest whole dollar. 1. What amount of cost should be assigned from human resources to each of the other departments

Leander Mfg.

Human resources cost assigned to other departments:

Administration                     100,800 (10%)

Maintenance                        151,200 (15%)

Assembly                            403,200 (40%)

Finishing                             352,800 (35%)

Total HR costs               $1,008,000

Explanation:

a) Data and Calculations:

                                    Human Resource  Administration  Maintenance

Direct costs incurred        $1,008,000         $1,562,400      $476,000

Human resources                                                10%                   5%

Administration                       10%                                                15

Maintenance                         15                           10

Assembly                              40                          50                   45

Finishing                               35                          30                   35

Allocation of Costs:

                                    Human Resource  Administration    Maintenance

Direct costs incurred  $1,008,000            $1,562,400            $476,000

Human resources      ($1,008,000)                100,800                151,200

Administration                  100,800 (10%) ($1,663,200)              184,800

Maintenance                     151,200 (15%)        184,800 (10%) ($812,000)

Assembly                        403,200 (40%)      924,000 (50%)   456,750 (45%)

Finishing                         352,800 (35%)      554,400 (30%)   355,250 (35%)

Human resources cost assigned to other departments:

Administration                     100,800 (10%)

Maintenance                        151,200 (15%)

Assembly                            403,200 (40%)

Finishing                             352,800 (35%)

Total HR costs               $1,008,000

Administration costs assigned to other departments:

Maintenance                             184,800 ($1,663,200 * 10/90)

Assembly                                 924,000 ($1,663,200 * 50/90)

Finishing                                  554,400 ($1,663,200 * 30/90)

Total administration costs $1,663,200

Maintenance costs assigned to other departments:

Assembly                              456,750 ($812,000 * 45/80)

Finishing                               355,250 ($812,000 * 35/80)

Total administration costs  $812,000

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