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Sarah Company has two serivce departments & two operating departments. Budgeted costs and budgeted activitiy in the various deprtments for the most recent year are

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Sarah Company has two serivce departments & two operating departments. Budgeted costs and budgeted activitiy in the various deprtments for the most recent year are presented below: Overhead Costs sq metres - Space occupied Number of Employees Machine Hours Direct labour hours Custodial Services Cafeteria $252,000 $140,000 1,000 2,000 30 Cutting Dept $600,000 8,000 150 60,000 20,000 Assemby Dept $900,000 10,000 200 10,000 40,000 20 Service Dept costs are allocated to operating departments with the cost of Custodial services allocated first on the basis of sq. metres occupied. The costs of the Cafeteria are allocated on the basis of njumber of employees Predetermined OH rates in the Cutting Dept are based on machine hours & in the Assembly Dept on Direct Labour Hours a) Using the Step Method of allocation, calculate the amount of serice dept costs allocated to each of the Operating Departments (6)

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