Cerce Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Finishing. Service Department Operating Department AdministrativeFacilities AssemblyFinishingDepartmental costs$29,440$46,740 $258,880$320,280Employee hours5,0002,000 29,00017,000Space occupied--square feet2,0002,000 30,0008,000 Administrative Department costs are allocated on the basis of employee hours and Facilities Department costs are allocated on the basis of space occupied. Required: Allocate the service department costs to the operating departments using the direct method.

Question

What will be an ideal response?

Answer 1

Allocation base for Administrative costs = 29,000 + 17,000 = 46,000
Allocation base for Facilities costs = 30,000 + 8,000 = 38,000