estmore Company has two service departments and two operating departments. Budgeted costs and other data relating to these departments are presented below: Building & grounds Personnel Operating dept A Operating dept B Departmental costs R54 000 R200 000 R650 000 R800 000 Square meters occupied 1 000 3 000 12 000 15 000 Number of employees 10 5 45 55 Direct labour hours 76 000 92 000 The costs of Building & Grounds are allocated first on the basis of square meters of space occupied. Personnel costs are allocated on the basis of number of employees. The departmental costs for the operating departments are overhead costs. Predetermined overhead rates in the operating departments are computed on the basis of direct labour-hours. Assume that the company uses the step method. The total amount of cost allocated from the two service departments to the operating departments for the year would be:
Westmore Company has two service departments and two operating departments. Budgeted costs and other data relating to these departments are presented below:
|
|
Building & grounds |
Personnel |
Operating dept A |
Operating dept B |
|
Departmental costs |
R54 000 |
R200 000 |
R650 000 |
R800 000 |
|
Square meters occupied |
1 000 |
3 000 |
12 000 |
15 000 |
|
Number of employees |
10 |
5 |
45 |
55 |
|
Direct labour hours |
|
|
76 000 |
92 000 |
The costs of Building & Grounds are allocated first on the basis of square meters of space occupied. Personnel costs are allocated on the basis of number of employees. The departmental costs for the operating departments are overhead costs. Predetermined overhead rates in the operating departments are computed on the basis of direct labour-hours.
Assume that the company uses the step method.
The total amount of cost allocated from the two service departments to the operating departments for the year would be:
| A. |
R850 000. |
|
| B. |
R254 000. |
|
| C. |
R1 704 000. |
|
| D. |
R1 450 000. |
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