Problem:
Carleton Company has two service department and two production departments. Information on annual manufacturing support costs and cost drivers follows:
Service Departments Production Departments
Item S1 S2 P1 P2
Support costs $65,000 $55,000 $160,000 $240,000
Direct labor hours 2,000 1,500 2,000 3,000
Number of Square footage 800 1,200 2,400 2,600
The company allocates service department costs using the sequential method. First, S1 costs are allocated on the basis of direct labor hours. Next, S2 costs are allocated on the basis of square footage. The square footage for S1 is assumed to be zero for this purpose. Determine the total support costs allocated to each of the two production departments.