Problem: Magee Engineering (Service Department Cost Allocation) Budgeted cost data for the production and service departments of Magee Engineering are as follows:
Machining $ 400,000
Plant Maintenance 600,000
Information Systems 116,000
Of its 8,000 budgeted direct labor hours, Plant Maintenance plans to spend 1,600 direct labor hours furnishing service to Information Systems, 2,400 direct labor hours for Machining, and 4,000 for Assembly. Of its 2,000 hours of budgeted computer time, Information Systems plans to spend 200 computer hours on work for Plant Maintenance, 1,600 computer hours for Machining, and 200 computer hours for Assembly.
Required: (1) Determine the costs allocated to the production departments using the direct method and the reciprocal method