Assume that the company uses the step method of allocating service department overhead costs to operating departments and Building and Grounds overhead costs are allocated first.

The overhead costs of the Personnel Department allocated to Department B are: (2)

a. R112 970

b. R107 368

c. R107 590

d. R0

Company has two service departments and two operating departments. Budgeted costs and other data relating to these departments are presented below: Building and Grounds Personnel Operating Departments A B Overhead Costs R54 000 R200 000 R650 000 R800 000 Square meters occupied 1 000 3 000 12 000 15 000 Number of employees 10 5 45 55 Direct labourhours 76 000 92 000 Additional information: Overhead costs of Building and Grounds are allocated first on the basis of square meters of space occupied. Personnel overhead costs are allocated on the basis of number of employees. Predetermined overhead rates in the operating departments are calculated on the basis of direct labour-hours.