Dis­tribute service department costs directly

Question

Question:

Overhead Distribution. Parker Manufacturing Company has two producing departments, Fabrication and Assembly, and three service departments, General Factory Administration, Factory Maintenance, and Factory Cafeteria. A sum­mary of costs and other data for each department prior to allocation of service department costs for the year ended June 30, 19--, shows:

			Service Departments
	Producing Fabrications	Departments Assembly	General Factory Administration	Factory Maintenancance	Factory Cafeteria
Direct labor costs	$1,950,000	$2,050,000	$90,000	$82,100	$87,000
Direct materials costs.	3,130,000	950,000		65,000	91,000
Factory overhead costs	1,650,000	1,850,000	70,000	56,100	62,000
Direct labor hours	562,500	437,500	31,000	27,000	42,000
Number of employees•	280	200	12	8	20
Square footage occupied •	88,000	72,000	1,750	2,000	4,800

The costs of General Factory Administration, Factory Maintenance, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. There are no factory overhead variances. Round all final calculations to the nearest dollar.

Required:

1. Assuming that Parker Manufacturing Company elects to dis­tribute service department costs directly to the producing departments without inter-service department cost allocation, compute the amount of Factory Maintenance costs that would be allocated to Fabrication.

2. Assuming the same policy of allocating service departments to producing departments only, compute the amount of General Factory Administration costs that would be allocated to Assembly.

3. Assuming that Parker Manufacturing Company elects to distribute service department costs to other service departments (starting with the service department with the greatest total costs) as well as to the producing departments and that once a service departments costs have been allocated, no subsequent service department costs are recirculated back to it, compute:

1. The amount of Factory Cafeteria costs that would be allocated to Factory Maintenance.

2. The amount of Factory Maintenance costs that would be allocated to Factory Cafeteria.