Problem 1 (10 Points). Chancellor Company is divided into four departments. Departments A and B are service departments and Departments 1 and 2 are operating (production) departments. The services of the two service departments are used by the other departments as follows: Services of Department A Department B............. Dept. A Dept. B Dept. 1 Dept. 2 50% 20% 30% 40% 60% Direct costs incurred by each department $60,000 $50,000 $70,000 $80,000 I Complete the following table: Allocation of Expenses to Departments Department Department Department A B Department 1 2 Total direct Department expenses.. $60,000 $50,000 $ 70,000 $ 80,000 Service department expenses Department A............ Subtotal Department B. Total Problem 2. (10 Points). Nesbit Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period: Direct Costs Machining Assembly Indirect Department Department Salaries Insurance Utilities Depreciation Maintenance Office expenses Cost of goods sold Cost $122,400 $ 85,700 $36,700 20,200 11,000 5,500 23,900 13,900 2,000 20,700 11,500 13,800 7,000 4,700 29,400 -0- -0- 71,100 327,600 121,200 Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows: Machining Assembly Square Footage 14,535 4,845 Number of Employees 78 52 Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796. Determine the departmental contribution to overhead and the departmental net income for each production department.