The Maintenance Department Has Been Servicing Gizmo Production for Four

Essay

The Maintenance Department has been servicing Gizmo Production for four years.Beginning next year,the company is adding a Scrap-Processing Department to recycle the materials from Gizmo Production.As a result,maintenance costs are expected to increase from $480,000 per year to $500,000 per year.The Scrap-Processing Department will use 25% of the maintenance efforts.
Required:
a.Using the stand-alone cost-allocation method,identify the amount of maintenance cost that will be allocated to Gizmo Production and the Scrap-Processing Department next year.
b.Using the incremental cost-allocation method,identify the amount of maintenance cost that will be allocated to Gizmo Production and the Scrap-Processing Department next year.
c.What is the difference between the two methods that would affect Scrap-Processing Department?