Murphy Company has two service departments and two production departments. Information on annual manufacturing overhead costs and cost drivers follows:

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. Determine the total overhead costs allocated to each of the two production departments.  

Transcribed Image Text:

ITEM Overhead costs Direct labor hours. Number of square feet. SERVICE DEPARTMENTS S1 $84,000 2,000 800 S2 $65,000 2,000 1,200 PRODUCTION DEPARTMENTS P1 P2 $160,000 $240,000 2,500 3,500 3,000 3,500