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: Operating Departments Service Departments Administrative Janitorial Maintenance Binding Printing Total $87,800 $69,000 $36,200 $258,900 $498,700 $950,600 Costs Number of employees Square feet of space 70 50 360 500 2201,200 9,200 1000 66,000 100,600 11,500 28,400 39,900 2,900 ,500 occupied Hours of press time Required Assuming that the company uses the direct method rather than the step-down method to allocate service department costs, how much cost would be assigned to each operating department? (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Service Departments Operating Departments Binding 258,900$ 498,700$950,600 Administration Janitorial Maintenance Printing Total Overhead costs 87,800 S 69,000 S 36,200 Allocations Administration costs Janitorial costs Maintenance costs Total overhead costs after allocations

Explanation / Answer

1. Calculation Of Cost For Each Department

Service Departments Operating Departments   

Administration Janitorial Maintenance Binding Printing Total

Overhead Costs $87800 $69000 $36200 $258900 $498700 $950600

Allocations

a.Administration Costs + $5121 + $3658 + $26340 +$36583 +$16098 87800

(Worning Note :1)

b. Janitorial Costs + $1989 + $ 7889 + $6310 +$7544 + $ 45268 69000

(Working Note :2)

c. Maintenance Costs +$1043 +$4139 + $3310 + $3958 + $23750 36200

(Working Note :3)

d.Allocations From Dept -82679 - 61111 -32890

(87800-5121) (69000-7889) (36200-3310)

e. Total Overhead Costs $ 8153 $ 15686 $35960 $306985 $583816

(a+b+c) (a+b+c) (a+b+c) (258900+a+b+c+d)(498700+a+b+c+d)

Working Note 1 : Allocation Of Administrative Costs

Administrative Costs Will Be Allocated Between Departments In Ratio Of No Of Employees working in each department

Total Administrative costs = $ 87800

Total Employees = 1200

Administration Janitorial Maintenance Binding Printing Employees/Costs

Employees 70 50 360 500 220 1200

Ad Costs =70/1200*87800 50/1200*87800 360/1200*87800 500/1200*87800 220/1200*8700

Ad Costs 5121 3658 26340 36583 16098 87800

Working Note 2 : Alloacation Of Janitorail Costs

Total Janitorial Costs = $69000

Total Sq Fts = 100600

Janitorial Costs Should Be Allocated Betwwn Departments In Ratio Of Sq Ft Occupied By Each Department

Administraion Janitorial Maintenance Binding Printing Total

Sq Fts 2900 11500 9200 11000 66000 100600

JCost (2900/100600*69000) (11500/100600*69000) (9200/100600*69000)(11000/100600*69) 66000/100600*69000  

JCosts 1989 7889 6310 7544 45268 69000

Working Note 3 : Allocation Of Maintenance Costs

Maintenance Costs Should Be Allocated Between Departments In Ratio Of Sq Ft Occupied By Each Department

Total Maintenance Costs = $ 36200

Total Sq Ft Occupied = 100600

Cost Allocation

Administration Janitorial Maintenance Binding Printing Total

Sq Ft 2900 11500 9200 11000 66000 100600

M Costs =(2900/100600*36200) (11500/100600*36200) (9200/100600*36200) (11000/100600*36200) (66000/100600*36200)

M Costs = $1043 $4139 $3310 $3958 $ 23750 $ 36200

  

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