The details pertaining to the Utilities Department of Sun, Inc., are as follows:

During the month of May the expense of operating the Utilities Department amounted to $17,400; of this amount $6,000 was considered to be fixed costs.
Required:

a. What dollar amounts of the Utilities Department expense should be allocated to each producing and service department if fixed costs are allocated according to volume at capacity production and the variable costs according to actual usage?

b. What are the reasons for allocating the costs of one service department to other service departments as well as to producing departments?

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Schedule of Kilowatt Hours Service Departments Producing Departments Repair Personnel Mixing Finishing Total Needed at capacity production... 19,800 25,200 18,000 27,000 90,000 Used during May 20,240 22,000 17,600 28,160 88,000