E5–3 Time allowed: 25 minutes The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow:

The company allocates service department costs by the direct 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 Assuming that the company uses the direct method, how much overhead cost would be allocated to each operating department?

Transcribed Image Text:

Service department B Overhead costs 140,000 105,000 48,000 Operating department 1 2 Total 275,000 430,000 998,000 Number of employees 60 35 140 Square metres of 15,000 10,000 20,000 315 40,000 210 760 100,000 185,000 space occupied Hours of press time 30,000 60,000 90,000