Motorcade Company has three service departments (S1, S2, and S3) and two product
ID: 2642443 • Letter: M
Question
Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's allocation of service department costs:
Budgeted Costs
Nbr of Employees
S1
$3,000,000
75
S2
2,280,000
50
S3
1,000,000
25
P1
150
P2
225
Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs.
Calculate the total service department cost allocated to each production department P1.
Calculate the total service department cost allocated to production department P1
Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's allocation of service department costs:
Budgeted Costs
Nbr of Employees
S1
$3,000,000
75
S2
2,280,000
50
S3
1,000,000
25
P1
150
P2
225
Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs.
Calculate the total service department cost allocated to each production department P1.
Explanation / Answer
Allocation Of cost Allocated to Prodction dept (150:225) Department Allocated by direct method No of Employee Allocated by number of employee P1 P2 S1 3000000 75 31,40,000.00 1256000 18,84,000.00 S2 2280000 50 20,93,333.33 837333.3 12,56,000.00 S3 1000000 25 10,46,666.67 418666.7 6,28,000.00 P1 150 P2 225 total Cost 6280000 6280000 2512000 3768000 Cost allocated to Production dept P1 2512000 P2 3768000
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