Guna publishing company has three service departments & two operating departments. Selected data from a recent period on five departments as follows: Cost type Service Departments Operating departments Total A B C 1 2 Overhead costs $140,000 $105,000 $48,000 $275,000 $430,000 $998,000 Number of employees 60 35 140 315 210 760 Space occupied 15,000 10,000 20,000 40,000 100,000 185,000 Hours of press time - - - 30,000 60,000 90,000 The company allocated service department costs by the step method in the following order. A (number of employees). B (Space occupied), & C (hours of press time). The company makes no distinction between variable & fixed service department costs. Required: 1) Assuming that the company used the direct method, how much overhead cost would be allocated to each operating departments? 2) Using the step method, allocate the service department costs to the operating departments
Guna publishing company has three service departments & two operating departments. Selected data from a recent period on five departments as follows:
|
Cost type |
Service Departments |
Operating departments |
Total |
|||
|
|
A |
B |
C |
1 |
2 |
|
|
|
$140,000 |
$105,000 |
$48,000 |
$275,000 |
$430,000 |
$998,000 |
|
Number of employees |
60 |
35 |
140 |
315 |
210 |
760 |
|
Space occupied |
15,000 |
10,000 |
20,000 |
40,000 |
100,000 |
185,000 |
|
Hours of press time |
- |
- |
- |
30,000 |
60,000 |
90,000 |
The company allocated service department costs by the step method in the following order.
A (number of employees). B (Space occupied), & C (hours of press time). The company makes no distinction between variable & fixed service department costs.
Required:
1) Assuming that the company used the direct method, how much overhead cost would be allocated to each operating departments?
2) Using the step method, allocate the service department costs to the operating departments.
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