(Solved Homework): Production Department A and B are supported by Service Department C and D. Operating costs for each department are A,…

Production Department A and B are supported by Service Department C and D. Operating costs for each department are A, $1,000,000; B, $2,000,000; C, $400,000; and D, $100,000. C’s costs are allocated to A, B, and D based on number of employees (A, 10; B, 8; C, 4; and D, 2). D’s total costs (including costs allocated from C) are allocated to A and B based on square footage (A, 2,000; B, 3,000). How much is the total cost for Department A?

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PREPARE COST ALLOCATION SCHDULE

A B C D TOTAL
Operating costs 1000000 2000000 400000 100000 3500000
c’s cost allocation (10:8:2) 200000 160000 (400000) 40000
D’s Cost allocation (2000:3000) 56000 84000    – (140000)
Total allocated cost 1256000 2244000 3500000

Total cost for department A is 1256000

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