Shannon Company allocates in indirect costs on the following bases: 1. Janitors wages and rent of...

Shannon Company allocates in indirect costs on the following bases:

1. Janitors wages and rent of building on the basis of floor space

2. Electricity, gas, water, and miscellaneous factory costs on the basis of percentages given

3. Maintenance department costs on the basis of chargeable maintenance hours

4. Storeroom department costs on the basis of proportion of number of requisitions

Management has hired you as a consultant to prepare a schedule of allocated costs. Use the step-method to allocate service department costs to production departments, starting with maintenance department.

Partially Completed Overhead Allocation Schedule
	Total	Dept. A	Dept. B	Dept. C	Dept. S Storeroom	Dept. M Maintenance	Indirect Costs Not Assigned to Any Department
Maintenance Wages	$1,800					$1,800
Storeroom Wages	1,000				$1,000
(1) Janitor's Wages	1,000						$1,000
Supplies Used	1,400	$200	$300	$100	600	200
(1) Rent-Factory Building	2,000						2,000
(2) Electricity, Gas, & Water	200						200
(2) Miscellaneous Factory
Costs	600						600
Total	$8,000
		Total	Dept. A	Dept. B	Dept. C	Storeroom	Maintenance
Floor Space (square feet)		50,000	16,000	11,000	20,000	2,000	1,000
Chargeable Maintenance Hours		500	150	200	100	50
Requisitions Drawn		200	140	40	20
Other Distribution Data Electricity, Gas, Water, & Misc		100%	30%	30%	20%	10%	10%

Please be detailed, I have the answer from the book but I don't have an explanation as to why that is the answer. Thank you.

Expert Solution

ekkarill92 answered 2 years ago

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