Question
In: Accounting
Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and...
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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: Round to two decimal places. |
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Budgeted Costs |
Nbr of Employees |
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|
S1 |
$3,120,000 |
75 |
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|
S2 |
2,060,000 |
50 |
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|
S3 |
1,000,000 |
25 |
||
|
P1 |
150 |
|||
|
P2 |
225 |
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Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs |
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Calculate the total service department cost allocated to production department P1
Solutions
Expert Solution
Number of employees in department P1 = 150
Number of employees in department P2 = 225
Total employees in Department P1 and P2 = Number of employees in department P1 + Number of employees in department P2
= 150 + 225
= 375
S1 Department cost allocated to department P1 = S1 department cost x Number of employees in department P1/Total employees in Department P1 and P2
= 3,120,000 x 150/375
= $1,248,000
S2 Department cost allocated to department P1 = S2 department cost x Number of employees in department P1/Total employees in Department P1 and P2
= 2,060,000 x 150/375
= $824,000
S3 Department cost allocated to department P1 = S3 department cost x Number of employees in department P1/Total employees in Department P1 and P2
= 1,000,000 x 150/375
= $400,000
| cost allocated to production department P1 | |
| S1 | 1,248,000 |
| S2 | 824,000 |
| S3 | 400,000 |
| Total service department cost allocated to production department P1 | $2,472,000 |
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ekkarill92 answered 2 years agoRelated Solutions
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