The Fitness Club has two operating departments- Programming & Classes and Individual fitness. There are also two service centers- Janitorial and Cafeteria. Janitorial costs are allocated based on square footage, while Cafeteria costs are allocated based on number of employees. The costs traceable to the operating and service center during 2019 were as follows: Service Centers Operating Departments Programming & Classes Individual Janitorial Cafeteria Fitness Materials 5,000 Labor МОН Total Square footage No. of Employee P 10,000 P 200,000 P 8,000 P 100,000 20,000 130,000 1,600 5 300,000 40,000 540,000 8,000 14 265,000 75,000 348,000 24,000 19 150,000 90,000 245,000 32,000 In addition to these costs, the Cafeteria generates revenues of P480,000. Janitorial is allocated based on square footage and Cafeteria is allocated based on the number of employees. Using the step method to allocate the service center costs, what is the total cost of Programming and Classes?

The Fitness Club has two operating departments- Programming & Classes and Individual fitness. There are also two service centers- Janitorial and Cafeteria. Janitorial costs are allocated based on square footage, while Cafeteria costs are allocated based on number of employees. The costs traceable to the operating and service center during 2019 were as follows: Service Centers Operating Departments Programming & Classes Individual Janitorial Cafeteria Fitness Materials 5,000 Labor МОН Total Square footage No. of Employee P 10,000 P 200,000 P 8,000 P 100,000 20,000 130,000 1,600 5 300,000 40,000 540,000 8,000 14 265,000 75,000 348,000 24,000 19 150,000 90,000 245,000 32,000 In addition to these costs, the Cafeteria generates revenues of P480,000. Janitorial is allocated based on square footage and Cafeteria is allocated based on the number of employees. Using the step method to allocate the service center costs, what is the total cost of Programming and Classes?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

The Fitness Club has two operating departments- Programming & Classes and Individual fitness.
There are also two service centers- Janitorial and Cafeteria. Janitorial costs are allocated based on
square footage, while Cafeteria costs are allocated based on number of employees. The costs
traceable to the operating and service center during 2019 were as follows:
Service Centers
Operating Departments
Programming & Classes Individual
Janitorial
Cafeteria
Fitness
Materials
5,000
Labor
МОН
P 10,000
P 200,000
P 8,000
100,000
20,000
130,000
1,600
5
300,000
40,000
540,000
8,000
14
265,000
75,000
348,000
24,000
19
150,000
90,000
245,000
32,000
Total
Square footage
No. of Employee
In addition to these costs, the Cafeteria generates revenues of P480,000. Janitorial is allocated based
on square footage and Cafeteria is allocated based on the number of employees.
Using the step method to allocate the service center costs, what is the total cost of Programming
and Classes?

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