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Total support costs allocation

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Carleton Company has two service department and two production departments. Information on annual manufacturing support costs and cost drivers follows:

Service Departments Production Departments
Item S1 S2 P1 P2

Support costs $65,000 $55,000 $160,000 $240,000

Direct labor hours 2,000 1,500 2,000 3,000

Number of Square footage 800 1,200 2,400 2,600

The company allocates service department costs using the sequential method. First, S1 costs are allocated on the basis of direct labor hours. Next, S2 costs are allocated on the basis of square footage. The square footage for S1 is assumed to be zero for this purpose. Determine the total support costs allocated to each of the two production departments.

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Carleton Company has two service department and two production departments. Information on annual manufacturing support costs and cost drivers follows:

Service Departments Production Departments
Item S1 ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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