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:
|
Costs allocated to P1 |
$32,000 from S1 |
|
? from S2 |
|
|
Costs allocated to P2 |
? from S1 |
|
$18,000 from S2 |
Total costs for the two service departments are $80,000. 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:
|
|
To |
|
|
From |
Printing |
Customer Service |
|
Information Services |
$32,000 |
? |
|
Operation Support |
? |
$18,000 |
c. What proportion of S1’s costs were allocated to P1 and P2?