Callaway Company uses two producing departments (A and B) and two service departments (S1 and S2). The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products. S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor hours, and the production departmental overhead rates are also based on direct labor hours. The following data are available for a recent period: Assume S2 Service Department costs are allocated first and the cost allocated to S1 Service Department from S2 is $3,600.
What is the cost allocated to each of the two producing departments by Service Department S1?
A) Department A = $15,360, Department B = $ 8,640
B) Department A = $36,000, Department B = $28,800
C) Department A = $ 9,000, Department B = $ 7,200
D) Department A = $17,644, Department B = $ 9,936

Question

Callaway Company uses two producing departments (A and B) and two service departments (S1 and S2). The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products. S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor hours, and the production departmental overhead rates are also based on direct labor hours. The following data are available for a recent period:  Assume S2 Service Department costs are allocated first and the cost allocated to S1 Service Department from S2 is $3,600.
What is the cost allocated to each of the two producing departments by Service Department S1?
A) Department A = $15,360, Department B = $ 8,640 
B) Department A = $36,000, Department B = $28,800 
C) Department A = $ 9,000, Department B = $ 7,200 
D) Department A = $17,644, Department B = $ 9,936

Quizplus · Accepted Answer

11ee47ca_0854_b8fc_9bb5_0112c178cf98_TBCB1008_00

Callaway Company Uses Two Producing Departments (A and B) and Two