Answer:
The Ferre Publishing company
Service Costs Assigned to each Operating Department:
Service Departments Operating Departments
Admin. Janitorial Mainten. Binding Printing Total
Costs $168,000 $126,000 $57,600 $330,000 $516,000 $1,197,600
Admin (168,000) 100,800 67,200 0
Janitorial (126,000) 36,000 90,000 0
Maintenance (57,600) 19,200 38,400 0
Total cost $486,000 $711,600 $1,197,600
Explanation:
a) Data and Calculations:
Service Departments Operating Departments
Administration Janitorial Maintenance Binding Printing Total
Costs $168,000 $126,000 $57,600 $330,000 $516,000 $1,197,600
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
Allocation bases:
Administration cost = Number of employees 525
Janitorial cost = Square feet 140,000
Maintenance cost = Hours of press time 90,000
Allocation Rates and to Operating Departments:
Administration $168,000/525 = $320 per employee
Binding = 315 * $320 = $100,800
Printing = 210 * $320 = $67,200
Janitorial costs = $126,000/140,000 = $0.90 per square feet
Binding = 40,000 * $0.90 = $36,000
Printing = 100,000 * $0.90 = $90,000
Maintenance costs = $57,600/90,000 = $0.64 per press hour
Binding = 30,000 * $0.64 = $19,200
Printing = 60,000 * $0.64 = $38,400
