1 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 Budget Cost of employees S1 $3,280,000 75 S2 $2,480,000 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 each production department P1 Calculate the total service department cost allocated to production department P1 2 Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects To stimulate business, the company is considering exhibiting at the Home and Garden Expo The exhibit will cost the company $12,000 for space At the show, Infinity Designs will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previous jobs The company estimates that revenue will increase by $36,000 over the next year as a result of the exhibit For the previous year, profit was as follows Revenue $201,000 Less Design Supplies (variable cost) $16,500 Salary of Owner $80,000 Salary of Kim $55,000 Rent $18,000 Utlilties $6,000 Depreciation of Office Equipment $3,600 Printing of advertising materials $700 Advertising in Middleton Journal $2,500 Travel Expenses (variable cost) $3,000 Depreciation of Company Cars $9,000 Calculate the impact of the exhibit on company profit 3 Each year, Sunshine Motos surveys 7,500 former and prospective customers regarding satisfaction and brand awareness For the current year, the company is considering outsourcing the survey to Global Associates, who have offered to conduct the survey and summarize results for $30,600 Craig Sunshine, the president of Sunshine Motors, believes that Global will do a higher quality job than his company has been doing, but is unwilling to spend more than $10,000 above the current costs The head of bookkeeping for Sunshine has prepared the following summary of costs related to the survey in the prior year Mailing $16,800 Printing (done by Lester Print Shop) $4,500 Salary of Pat Fisher, part time employee who stuffed envelopes and summarized data when surveys were returned (100 hours X $15) $1,500 Share of depreciation of computer and software used to track survey responses and summarized results $1,100 Share of electricity phone etc based on square feet of space occupied by Pat Fisher vs entire company $500 What is the incremental cost of going outside versus conducting the survey as in the past

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1. 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

1. 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:

	Budget Cost	# of employees
S1	$3,280,000	75
S2	$2,480,000	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 each production department P1.

Calculate the total service department cost allocated to production department P1

Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Home and Garden Expo. The exhibit will cost the company $12,000 for space. At the show, Infinity Designs will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previous

jobs. The company estimates that revenue will increase by $36,000 over the next year as a result of the exhibit. For the previous year, profit was as follows:

Revenue	$201,000
Less
Design Supplies (variable cost)	$16,500
Salary of Owner	$80,000
Salary of Kim	$55,000
Rent	$18,000
Utlilties	$6,000
Depreciation of Office Equipment	$3,600
Printing of advertising materials	$700
Advertising in Middleton Journal	$2,500
Travel Expenses (variable cost)	$3,000
Depreciation of Company Cars	$9,000

Calculate the impact of the exhibit on company profit.

Each year, Sunshine Motos surveys 7,500 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to Global Associates, who have offered to conduct the survey and summarize results for $30,600.Craig Sunshine, the president of Sunshine Motors, believes that Global will do a higher-quality job than his company has been doing, but is unwilling to spend more than $10,000 above the current costs. The head of bookkeeping for Sunshine has prepared the following summary of costs related to the survey in the prior year.

Mailing $16,800

Printing (done by Lester Print Shop) $4,500

Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (100 hours X $15) $1,500

Share of depreciation of computer and software used to track survey responses and summarized results. $1,100

Share of electricity/phone/etc. based on square feet of space occupied by Pat Fisher vs. entire company. $500

What is the incremental cost of going outside versus conducting the survey as in the past?