The following information is departmental cost allocation with two service departments and two production departments.       Percentage Service Provided to Department Cost S1 S2 P1 P2 Service 1 (S1) $ 40,000     0 %   40 %   30 %   30 % Service 2 (S2)   30,000     25     0     45     30   Production 1 (P1)   200,000                           Production 2 (P2)   250,000                               What is the total cost in P1 and P2 and what is the amount of service department cost allocated to P1 and P2 using the step method with S1 going first?

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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.