Lamar Company Has Two Production Departments and a Maintenance Department

Essay

Lamar Company has two production departments and a maintenance department.In addition,the company keeps other costs for the general plant in a separate account.The estimated cost data for Year 1 follow:

The general plant services the three departments in the following proportions: 50 percent (Department 1);30 percent (Department 2);20 percent (Maintenance).
Required:
Allocate maintenance costs based on maintenance hours.Allocate maintenance department and general plant costs to the production departments.Use the step method,starting with general plant costs.