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Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are presented below: Operating Departments Service Departments Administrative
Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are presented below: Operating Departments Service Departments Administrative Costs Number of employees $84,000 Square metres of space occupied 80 300 Janitorial $67,800 60 1,200 Equipment Maintenance $36,000 240 1,000 Prep $256,100 600 2,000 Finishing Total $498,600 $942,500 300 1,280 7,000 11,500 Machine-hours 10,000 30,000 40,000 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: Assuming that the company uses the direct method rather than the step-down method to allocate service department costs, how much overhead cost would be assigned to each operating department? (Negative amounts should be indicated by a minus sign.) Service Departments Administrative Janitorial Equipment Maintenance Operating Departments Prep Finishing Total Departmental costs before allocations Allocations: Administrative Janitorial Equipment maintenance Total costs after allocation
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