The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow: Service Department Operating Department A B C 1 2 Total Overhead costs £ 100,000 £ 115,000 £ 73,000 £ 266,500 £ 289,000 £ 843,500 Number of employees 57 33 132 297 198 717 Square feet of space occupied 12,600 7,100 21,000 42,000 105,000 187,700 Hours of press time 34,000 68,000 102,000 The company allocates service department costs by the step method in the following order: A (number of employees), B (space occupied), and C (hours of press time). The company makes no distinction between variable and fixed service department costs. Required: Using the step method, allocate the service department costs to the operating departments. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) Service Departments Operating Departments A B C 1 2 Total Overhead costs Allocation: Department A: Department B: Department C: Total overhead costs after allocations

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 Department	Operating Department
	A	B	C	1	2	Total
Overhead costs	£ 100,000	£ 115,000	£ 73,000	£ 266,500	£ 289,000	£ 843,500
Number of employees	57	33	132	297	198	717
Square feet of space occupied	12,600	7,100	21,000	42,000	105,000	187,700
Hours of press time				34,000	68,000	102,000

The company allocates service department costs by the step method in the following order: A (number of employees), B (space occupied), and C (hours of press time). The company makes no distinction between variable and fixed service department costs.

Required:

Using the step method, allocate the service department costs to the operating departments. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.)

	Service Departments	Operating Departments
	A	B	C	1	2	Total
Overhead costs
Allocation:
Department A:
Department B:
Department C:
Total overhead costs after allocations