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:
		Custodial		Cutting	Assemby
		Services	Cafeteria	Dept	Dept
Overhead Costs		$252,000	$140,000	$600,000	$900,000
Sq metres -Space occupied		1,000	2,000	8,000	10,000
Number of Employees		20	30	150	200
Machine Hours		-	-	60,000	10,000
Direct labour hours		-	-	20,000	40,000
			-
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 number 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)
Description							Total