Question

Using the sequential method, Samantha Company allocates Maintenance Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. The company has determined to allocate Maintenance costs before Cafeteria costs.

Square Feet		Number of Employees
Maintenance Department	1,500		20
Cafeteria Department	1,000		10
Cutting Department	2,000		60
Assembly Department	17,000		20

1. If Samantha Company has $100,000 of Maintenance Department costs and $200,000 for Cafeteria, how much is allocated to the Cutting Department, and how much is allocated to the Assembly Department?

Answer 1

	Maintenance Department	Cafeteria Department	Cutting Department	Assembly Department
Overhead cost	$100000	$200000
Allocate Cost of Maintenance Dept	($100000)	$5000	$10000	$85000
		($25000)	$18750	$6250
			$28750	$91250

Mainenace Dept:-

Cafeteria Dept = (1000/20000 * $100000) = $5000

Cutting Dept = (2000/20000 * $100000) = $10000

Assembly Dept = (17000/20000 * $100000) = $85000

Cafeteria Dept:-

Cutting Dept = (60/80 * $25000) = $18750

Assembly Dept = (20/80 * $25000) = $6250