Homework Answers
a) Total service department cost (S1+S2) allocated to P2
|
Given - 30% of the Operation Support
Department S2 cost is allocated to P2, and the cost allocated to P2 is $27000 |
|
| hence, the total cost of S2 = Cost allocated to P2 x (30% + 50% )/ 30% | |
| = $27000 x 0.8/0.3 = $72000 | |
| Total cost for two service departments | $120,000 |
| Less: Cost of S2 | $72000 |
| Cost of S1 | $48,000 |
| Now, it is given cost allocated to P1 from S1 is $48000, which is total cost of S1 | |
| thus the cost allocated to P2 is $0 ($48000-$48000) = 0 | |
| Total service department cost allocated to P2 | |
| S1 | $0 |
| S2 | $27,000 |
| Total service department cost allocated to P2 (S1 + S2) | $27,000 |
b) Complete the Table
| To | ||
| From | Order Processing (P1 ) |
Delivery (P2) |
| Information service (S1) | $48,000 | $0 |
| Operation Support ( S2) (72000 - 27000) | $45,000 | $27,000 |
c) Proportion of S1 cost allocated to P1 and P2
| Proportion | |
| $48000 to P1 (total S1 cost allocated to P1) | 100 % to P1 |
| $0 to P2 | 0 % to P2 |
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number of employees is used as the allocation base for all service
department costs.
Calculate the total service department cost allocated to each...
The Springfield Company has three service departments, S1, S2,
and S3, and two production departments, P1 and P2. The following
data relate to Springfield’s allocation of service department
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S1
$4,588,000
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S2
2,834,000
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S3
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P1
196
P2
294
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number of employees is used as the allocation base for all service
department costs.
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