lksbaggin has one cost pool (General Plant), one service department (Sanitation), and two production departments (Collection and Packaging), plus it uses the STEP (sequential) method of cost allocation to allocate costs (in the order that they are mentioned above) to the two production departments. General plant, Sanitation, Collection, and Packaging, have departmental costs before allocation of $80,000, $192,000, $600,000, and $900,000 respectively. General plant costs are allocated on the basis of number of direct labor hours worked. Sanitation, Collection, and Packaging worked 2000, 8000, and 10,000 direct labor hours respectively this period. Sanitation costs are allocated on the basis of square footage occupied by a department. The entire factory is 220,000 square feet with Sanitation occupying the first 20,000 square feet of that total, while Collection and Packaging each occupy half of the remaining square footage. How much of the Sanitation cost (after any prior allocations to Sanitation) should be allocated to Packaging?

Answer rating: 100% (QA)

To calculate how much of the Sanitation cost should be allocated to Packaging we need to follow the ... View the full answer