Simba Company Has Three Service Departments, A, B, and C

Simba Company has three service departments, A, B, and C, and two production departments, P1 and P2. Costs in departments A and B are allocated based on square feet, and costs in department C are allocated based on direct- labor hours.
The following data are available: $\begin{array}{l}&\text { Direct } & \text { Square Feet } & \text { Direct- } \\&\text { Department Costs} & \text { Occupied } & \text { Labor }\\&&&\text { Hours }\\\text { Service Dep artment: }\\\mathrm{A} & \$ 300,000 & 6,000 & 13,000 \\\text { B } & 225,000 & 4,000 & 7,000 \\\text { C } & 480,000 & 3,000 & 6,000\text { Production }\\\text { Department: }\\\text { P1 } & \$ 750,000 & 8,000 & 17,000 \\\text { P2 } & 600,000 & 7,000 & 15,000\end{array}$ Required:
Assuming the direct method of allocating costs, determine the amount of each service department's costs that will be allocated to each production department.

Correct Answer:

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Service Department A: 8,000 + 7,000 = 15...

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