Required information Skip to question The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow: Service Departments Operating Departments Administration Janitorial Maintenance Binding Printing Total Costs $163,800 $122,850 $56,160 $321,750 $503,100 $1,167,660 Number of employees 60 35 140 315 210 760 Square feet of space occupied 15,000 10,000 20,000 40,000 100,000 185,000 Hours of press time 30,000 60,000 90,000 Administration is allocated based on number of employees; Janitorial based on space occupied; and Maintenance based on hours of press time. Required: Assuming that the company uses the direct method to allocate service department costs, how much cost would be assigned to each operating department

The Ferre Publishing Company

The cost assigned to each operating department:

Binding =  $463,320      

Printing = $704,340

Explanation:

a) Data and Calculations:

                           Service Departments                    Operating Departments

               Administration  Janitorial  Maintenance      Binding         Printing

Total Costs $163,800    $122,850      $56,160         $321,750     $503,100 $1,167,660

Number of

 employees    60                 35               140                315                 210   760

Square feet

 of space

 occupied     15,000        10,000         20,000            40,000      100,000 185,000

Hours of

 press time                                                                  30,000       60,000       90,000

Allocation of Service Departments' Costs to the Operating Departments;

                           Service Departments                    Operating Departments

               Administration  Janitorial  Maintenance      Binding         Printing

Total Costs $163,800    $122,850      $56,160         $321,750     $503,100 $1,167,660

Admin.        (163,800)           8,190        32,760              73,710          49,140     0

Janitorial                          (131,040)        16,380            32,760          81,900

0

Maintenance                                      (105,300)           35,100          70,200  0

Total                                                                        $463,320      $704,340  $1,167,660

Rate of Administration Cost to the other departments =$234  ($163,800/700)

Janitorial   35*$234 = $8,190

Maintenance  140*$234 = $32,760

Binding 315*$234 = $73,710  

Printing 210*$234 = $49,140

Janitorial cost:

Rate based on space occupied = $131,040/160,000 = $0.819

Maintenance  = 20,000*$0.819 = $16,380

Binding   = 40,000*$0.819 = $32,760

Printing =   100,000*$0.819 = $81,900

Maintenance Cost of $105,300

Rate = $1.17 ($105,300/90,000)

Binding = 30,000*$1.17 = $35,100

Printing = 60,000*$1.17 = $70,200

answer; organizational;

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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