Refer to the data for the Ferre Publishing Company in E4-8. Assume that the company allocates service department costs by the direct method, rather than by the step method.

Data From E4-8

The Ferre Publishing Company has three service departments and two operating departments. Selected data
from a recent period on the five departments follow:

The company allocates service department costs by the step method in the following order: A (number of employees), B (space occupied), and C (hours of press time). The company makes no distinction between variable and fixed service department costs.

Required
Assuming that the company uses the direct method, how much overhead cost would be allocated to each operating department?

Transcribed Image Text:

Overhead costs Number of employees Square feet of space occupied Hours of press time Service department A £140,000 60 15,000 B с £105,000 £48,000 35 140 10,000 20,000 Operating department 1 2 Total £275,000 £430,000 £998,000 315 210 40,000 100,000 30,000 60,000 760 185,000 90,000