Exercise 6-8. Allocation of Service Department costs [LO 3] Marvin Company has three service departments, $1, $2, and $3, and two production departments, P1 and P2. The following data relate to Marvin?s allocation of service department costs: ________Budgeted Costs______Number of Employees_________ $1 $4,000,000 80 $2 3,000,000 60 $3 2,000,000 30 P1 200 P2 300 Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs. Required a. Allocate service department costs to production departments. b. Calculate the total service department cost allocated to each production department.
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