Company management has decided to allocate administration and editorial costs using dollars of… 1 answer below »

(Algebraic method) Lombardi Printing has two support departments (administration and editorial) and two operating divisions (college texts and professional publications). Following are the direct costs and allocation bases for each of these areas:

ALLOCATION BASES

Number of

Department

Direct Costs

Assets Employed

Employees

Administration

$ 225,000

$310,000

5

Editorial

175,000

75,000

4

College texts

2,250,000

600,000

25

Professional publications

950,000

525,000

15

Company management has decided to allocate administration and editorial costs using dollars of assets employed and number of employees, respectively. Use the algebraic method to allocate the support department costs and determine the total operating costs of college textbooks and professional publications.

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