Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 18

Solve for Unknowns
Pat's Print Shops has a warehouse that supplies paper and other supplies to its store locations. It has two service departments, Information Services (S1) and Operation Support (S2), and two operating departments, Printing (P1) and Customer Service (P2). As an internal auditor, you are checking the company's procedures for cost allocation. You find the following cost allocation results for September:

Total costs for the two service departments are $50,000.
Operation Support's services are provided as follows:
•50 percent to Printing.
•30 percent to Customer Service.
The direct method of allocating costs is used.
Required
a. What are the total service department costs (S1 + S2) allocated to P2
b. Complete the following:

c. What proportion of S1's costs were allocated to P1 and P2