Jamison Company has two service departments and two producing departments.Square footage of space occupied by each department follows: $$\begin{array} { | l | r | }
\hline \text { Custodial services } & 1,000 \mathrm { ft } \
\hline \text { General administration } & 3,000 \mathrm { ft } \
\hline \text { Producing department A } & 8,000 \mathrm { ft } \
\hline \text { Producing department B } & \underline{8,000 \mathrm { ft }} \
\hline & 20,000 \mathrm { ft } \
\hline
\end{array}$$The department costs of Custodial Services are allocated on a basis of square footage of space.If Custodial Services costs are budgeted at $38,000,the amount of cost allocated to General Administration under the direct method would be:

A) $0.
B) $7,125.
C) $6,000.
D) $5,700.

Question

Jamison Company has two service departments and two producing departments.Square footage of space occupied by each department follows: $$\begin{array} { | l | r | } 
\hline \text { Custodial services } & 1,000 \mathrm { ft } \
\hline \text { General administration } & 3,000 \mathrm { ft } \
\hline \text { Producing department A } & 8,000 \mathrm { ft } \
\hline \text { Producing department B } & \underline{8,000 \mathrm { ft }} \
\hline & 20,000 \mathrm { ft } \
\hline
\end{array}$$The department costs of Custodial Services are allocated on a basis of square footage of space.If Custodial Services costs are budgeted at $38,000,the amount of cost allocated to General Administration under the direct method would be:

A) $0.
B) $7,125.
C) $6,000.
D) $5,700.

Quizplus · Accepted Answer

Under the direct method, service department costs are allocated only to producing departments, not to other service departments. Therefore, no costs are allocated to General Administration.

Jamison Company Has Two Service Departments and Two Producing Departments