SB Exercise 4B-3 through Exercise 4B-4 (Algo)

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	$168,000	$126,000	$57,600		$330,000	$516,000	$1,197,600
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

Exercise 4B-3 (Algo) Step-Down Method [LO4-11]

The company allocates service department costs by the step-down method in the following order: Administration (number of employees), Janitorial (space occupied), and Maintenance (hours of press time).

Required:

Using the step-down method, allocate the service department costs to the operating departments. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations.)

Service DepartmentsOperating DepartmentsAdministrationJanitorialMaintenanceBindingPrintingTotalDepartmental costs before allocations$168,000$126,000$57,600$330,000$516,000$1,197,600Allocations:Administration costs(168,000)Janitorial costsMaintenance costsTotal costs after allocations$0$126,000$57,600$330,000$516,000$1,029,600