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Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs. 1,
Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs.
1, Allocate service department costs to production departments.
Service | Service dept. | Cost Allocated to | |||||
Department | Costs | P1 | P2 |
S1 | $4,355,000 | $ | $ | ||||
S2 | 2,923,000 | $ | |||||
S3 | 2,840,000 | $ |
2, Calculate the total service department cost allocated to each production department.
Service dept. | Cost Allocated to | ||||||||
Costs | P1 | P2 | |||||||
Total cost | $ | $ | $ |
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