Question

Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $280,000 and Maintenance has costs of $300,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are:

            Cafeteria Services    5

            Maintenance     4

Assembly Department 10

Packaging Department 9

Answer 1

Particulars			Cafeteria	Maintenance	Assembly	Packaging
Pre-allocation cost			$        280,000	$        300,000
Allocating cost of:
Cafeteria			$      (280,000)	$          48,696	$      121,739	$      109,565
Balance			$                   -	$        348,696	$      121,739	$      109,565
Allocating cost of:
Maintenance				$      (348,696)	$      183,524	$      165,172
Answer:	$165,172

Workings:
Allocating cost of:
Cafeteria
To Maintenance		($ 280000 x 4/23)			$         48,696
To Assembly		($ 280000 x 10/23)			$      121,739
To Packaging		($ 280000 x 9/23)			$      109,565
Allocating cost of:
Maintenance
To Assembly		[($ 300000 + $ 48696) x 10/19)			$      183,524
To Packaging		[($ 300000 + $ 48696) x 9/19)			$      165,172