Managerial Accounting Exercise - Please use the "Exercise 6-8" to solve the "What If" section. (Both charts are below)

SOLVE THIS PART:

Exercise 6-8 Cost Allocation Process 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 Number of Employees 90 60 40 200 300 Costs S1 S2 S3 P1 P2 $4,500,000 3,000,000 2,700,000 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 40% 60% 200/500 300/500 Portion of employees in P1 Portion of employees in P2 Cost Allocated to P2 Department Costs Service Department S1 S2 S3 P1 $ 4,500,000 1,800,000 $2,700,000 3,000,000 ,200,000 1,800,000 2,700,000 080,000 1,620,000 $10,200,000 $4,080,000 $6,120,000 b. Calculate the total service department cost allocated to each production department. Cost allocated to P1 Cost allocated to P2 $4,080,000 $6,120,000 What-if? Consider the following after you have completed the requirements of E6-8 The manager of department P2 thinks he is being charged more than his fair share' of service department costs from department S2. He argues that department S2 costs have been less than budget by $80,000 for each of the past few months. He requests that the allocation be based on actual instead of budgeted costs. 1. Determine the costs to be allocated to department P2 from department S2 if actual costs are allocated rather than budgeted costs Allocated Costs Cost Allocated to P1 P2 Allocated of budgeted costs Allocation of actual costs 2. Which allocation basis appears to be more fair to the departments receiving the allocations