Required information [The following information applies to the questions displayed below.] The following information is departmental cost allocation with two service departments and two production departments. P1 P2 Department Service 1 (S1) Service 2 (S2) Production 1 (P1) Production 2 (P2) Cost $ 47,000 37,000 270,000 320,000 Total Cost Allocated Percentage Service Provided to S1 0% 20 S2 20% 0 What is the amount of service department cost allocated to P1 and P2 using the direct method if the cost in P1 is changed from $270,000 to $290,000? P1 P2 40% 40% 60 20

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.