| Exercise E6 8 Allocation of Service Department Costs | ||||||||
| Marvin Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Marvin’s allocation of service department costs: | ||||||||
| Budgeted Costs | Nbr of Employees | |||||||
| S1 | $4,000,000 | 80 | ||||||
| S2 | 3,000,000 | 60 | ||||||
| S3 | 2,000,000 | 30 | ||||||
| P1 | 200 | |||||||
| P2 | 300 | |||||||
| Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs. | ||||||||
| Required: | ||||||||
| a. Allocate service department costs to production departments. | ||||||||
| Nbr of employees: | Total Employees: | % of Employees: | ||||||
| P1 | Number | Number | Formula | |||||
| P2 | Number | Number | Formula | |||||
| b. Calculate the total service department cost allocated to each production department. | ||||||||
| Service Department |
Service Dept. Costs |
Costs Allocated to: | ||||||
| P1 | P2 | |||||||
| S1 | Amount | Amount | Formula | |||||
| S2 | Amount | Amount | Formula | |||||
| S3 | Amount | Amount | Formula | |||||
| Total: | Formula | Formula | Formula | |||||
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