Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are presented below: Costs Number of employees Square metres of space occupied Machine-hours Service Departments Equipment Administrative Janitorial Maintenance $100,000 $36,000 80 240 $67,800 60 300 1,200 1,000 Operating Departments Prep $256,100 600 2,000 42,000 Finishing Total $498,600 $958,500 300 1,280 7,000 11,500 78,000 120,000 The company allocates service department costs by the step-down method in the following order: Administrative (number of employees), Janitorial (space occupied), and Equipment Maintenance (machine-hours). Required: Using the step-down method, allocate the service department costs to the operating departments. (Negative amounts should be
Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are presented below: Costs Number of employees Square metres of space occupied Machine-hours Service Departments Equipment Administrative Janitorial Maintenance $100,000 $36,000 80 240 $67,800 60 300 1,200 1,000 Operating Departments Prep $256,100 600 2,000 42,000 Finishing Total $498,600 $958,500 300 1,280 7,000 11,500 78,000 120,000 The company allocates service department costs by the step-down method in the following order: Administrative (number of employees), Janitorial (space occupied), and Equipment Maintenance (machine-hours). Required: Using the step-down method, allocate the service department costs to the operating departments. (Negative amounts should be
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are
presented below:
Costs
Number of employees
Square metres of space occupied
Machine-hours
Departmental costs before allocations
Allocations:
Service Departments
Equipment
Administrative Janitorial Maintenance
$100,000
$36,000
80
240
1,000
$67,800
60
1,200
300
Administrative
Janitorial
Maintenance
Total costs after allocation
The company allocates service department costs by the step-down method in the following order: Administrative (number of
employees), Janitorial (space occupied), and Equipment Maintenance (machine-hours).
$
Required:
Using the step-down method, allocate the service department costs to the operating departments. (Negative amounts should be
indicated by a minus sign.)
Service Departments
Janitorial Maintenance
Administrative
0
0 $
Operating Departments
Prep
$256,100
0 $
600
2,000
42,000
0 $
Finishing Total
$498,600 $958,500
300
1,280
7,000
11,500
78,000
120,000
Operating Departments
Prep
Finishing
0
Total
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