question archive Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2)
Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2)
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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
Budgeted Costs Nbr of Employees
S1 $3,400,000 . 75
S2 2,740,000 . 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 production department P1
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Answer:
Total service department cost allocated to Production Department P1 = $4,284,000.
Step-by-step explanation
Total budgeted cost = budgeted cost S1 + budgeted cost S2 + budgeted cost S3 = $3,400,000 + 2,740,000 + 1,000,000 = $7,140,000
So,total budgeted cost is $7,1400,000.
Total number of employees of production departments = Number of employees P1 + Number of employees P2 = 150 + 225 = 375
Thus, total numbers of employees in production department are 375.
Share of P1 = (Total budgeted costs / Total number of employees in production department)* Number of employees P2
= ($7,140,000/375)*225 = $4,284,000
