Question

The Ceradyne Company has three service departments, S1, S2, and S3, and two production departments, P1...

The Ceradyne Company has three service departments, S1, S2, and S3, and two production departments, P1 and P2. The following data relate to Ceradyne’s allocation of service department costs:

Budgeted Costs Number of Employees
S1 $4,101,000 87
S2 3,110,000 58
S3 2,865,000 37
P1 204
P2 306


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.

Service dept. Cost Allocated to
Costs P1 P2
Total cost $

$

$

0 0
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Answer #1
Total number of employees of P1 & P2 = 204 + 306 510
Service dept. Costs Cost allocated to
P1 P2

Total cost

10076000

[ 4101000 + 3110000 + 2865000 ]

4030400

[ 10076000 * 204 / 510 ]

6045600

[ 10076000 * 306 / 510 ]

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