The Lucas Manufacturing Company has two production departments (fabrication and assembly) and three service departments (general factory administration, factory maintenance, and factory cafeteria). A summary of costs and other data for each department, prior to allocation of service department costs for the year ended June 30, appears below: The costs of the general factory administration department, factory maintenance department, and factory cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. Assuming that Lucas elects to use the sequential method to distribute service department costs (starting with the factory cafeteria), what would be the amount of factory cafeteria costs that would be allocated to the factory maintenance department?

Question

The Lucas Manufacturing Company has two production departments (fabrication and assembly) and three service departments (general factory administration, factory maintenance, and factory cafeteria). A summary of costs and other data for each department, prior to allocation of service department costs for the year ended June 30, appears below: The costs of the general factory administration department, factory maintenance department, and factory cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively.  Assuming that Lucas elects to use the sequential method to distribute service department costs (starting with the factory cafeteria), what would be the amount of factory cafeteria costs that would be allocated to the factory maintenance department?

Quizplus · Accepted Answer

Factory Cafeteria allocates its costs based on the number of employees.
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The Lucas Manufacturing Company Has Two Production Departments (Fabrication and Assembly)