The Ferre Publishing Company has three service departments and two operating dep

Question

The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow:

Service Departments

Operating
Departments

Assuming that the company uses the direct method rather than the step-down method to allocate service department costs, how much cost would be assigned to each operating department? (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow:

Explanation / Answer

Particulars Basis of allocation Ratio Service department Costs Operating departments Administration janitorial Maintenance Binding Printing Overhead Costs 86300 73600 38500 257300 491800 Allocation: Administrative costs Floor area 8900:71300 -86300 9577 76723 Janitorial cost Number of employees 730:310 -73600 51662 21938 Maintenance costs Hours of press time 11500:30200 -38500 10618 27882 Total overhead costs after allocation 0 0 0 329157 618343

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