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
	Administration	Janitorial	Maintenance		Binding	Printing	Total
Costs	$147,000	$110,250	$50,400		$288,750	$451,500	$1,047,900
Number of employees	60	35	140		315	210	760
Square feet of space occupied	15,000	10,000	20,000		40,000	100,000	185,000
Hours of press time					30,000	60,000	90,000

Administration is allocated based on number of employees; Janitorial based on space occupied; and Maintenance based on hours of press time.

Required:

Assuming that the company uses the direct 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.)

Answer 1

	Administration	Janitorial	Maintenance	Binding	Printing	Total
Departmental costs before allocation:	147000	110250	50400	288750	451500	1047900
Allocations:
Administration costs	-147000			88200	58800	0
Janitorial costs		-110250		31500	78750	0
Maintenance costs			-50400	16800	33600	0
Total costs after allocation	0	0	0	425250	622650	1047900

Workings:
Administration:
Binding	88200	=147000/(315+210)*315
Printing	58800	=147000/(315+210)*210
Janitorial:
Binding	31500	=110250/(40000+100000)*40000
Printing	78750	=110250/(40000+100000)*100000
Maintenance:
Binding	16800	=50400/(30000+60000)*30000
Printing	33600	=50400/(30000+60000)*60000