Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's allocation of service department costs: Round to two decimal places. Budgeted Costs Nbr of Employees S1 $3,120,000 75 S2 2,320,000 50 S3 1,000,000 25 P1 150 P2 225 Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs Calculate the total service department cost allocated to production department P1
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's allocation of service department costs: Round to two decimal places. |
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Budgeted Costs |
Nbr of Employees |
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S1 |
$3,120,000 |
75 |
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S2 |
2,320,000 |
50 |
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S3 |
1,000,000 |
25 |
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P1 |
150 |
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P2 |
225 |
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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 |
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Calculate the total service department cost allocated to production department P1
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