Question
A Company has two service depts and two operating depts. The following data are available from last year: Service Department Operating Department 1 2 X
A Company has two service depts and two operating depts. The following data are available from last year: Service Department Operating Department 1 2 X Y Departmental costs $ 74,000 $ 53,000 $ 211,000 $111,000 Number of transactions21,000 23,000 9,000 27,000 Square feet occupied3,0002,0003,000 3,000 The costs of service depts 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs. Assuming that the company allocates service department costs by the direct method, the total overhead costs allocated from Department 2 to Department Y are:
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