Question
Westmore Company has two Service Departments and two Operating Departments. Budgeted costs and other data relating to these departments are presented below: Operating Department Janitorial
Westmore Company has two Service Departments and two Operating Departments. Budgeted costs and other data relating to these departments are presented below:
Operating Department | |||||
Janitorial costs | Personnel | A | B | ||
Departmental Costs | $54,000 | $200,000 | $650,000 | $800,000 | |
Square feet Occupied | 1,000 | 3,000 | 12,000 | 15,000 | |
Number of Employees | 10 | 5 | 45 | 55 | |
Direct Labour Hours |
|
| 76,000 92,000 | ||
|
The costs of Janitorial are allocated first on the basis of square feet of space occupied. Personnel costs are allocated on the basis of number of employees. The departmental costs for the Operating Departments are overhead costs. Predetermined overhead rates in the Operating Departments are computed on the basis of direct labor hours.
1.) If the company uses the direct method to allocate service department costs to the operating departments, how much janitorial cost would be allocated to Department A?
2.) If the company uses the direct method to allocate service department costs to the operating departments the predetermined overhead rate per direct labor hour that would be used in department B would be?
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