The following data summarize a small publishing firms indirect costs: Printing Services costs are assigned on the

The following data summarize a small publishing firm’s indirect costs:

Printing Services’ costs are assigned on the basis of number of pages printed, Editing Services’ costs are assigned based on the number of editor inquiries, and Proofing Services’ costs are assigned based on the number of errors corrected. The number of books produced is the basis for applying overhead for the Trade Publishing and Custom Publishing revenue centers. Each of the revenue centers produced 200 books.
Required
1. Use the direct method of cost allocation to determine the two revenue centers’ overhead costs.
2. Use the step method of cost allocation to determine the two revenue centers’ overhead costs. Assign the service costs of Printing Services first, Editing Services second, and Proofing Services third.
3. Compute departmental overhead rates for Trade Publishing and Custom Publishing under the direct method of cost allocation.
4. Compute departmental overhead rates for Trade Publishing and Custom Publishing under the step method of costallocation.

Transcribed Image Text:

Printing Editing Proofing Trade Services Services Services Publishing Publishing Custom Indirect costs Number of pages Number of inquiries Number of errors $140,000 $120,000 $40,000 80,000 $70,000 5,000 10,000 40,000 20,000 2,400 1,800 1,000 2,600 900