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Allocating Service Department Costs: Allocation Basis Alternatives
Weld-Rite Fabricators has two producing departments, P1 and P2, and one service department, S1.
Estimated directed overhead costs per month are as follows:

P1	$240,000
P2	400,000
S1	145,600

Other data follow:

	P1	P2
Numbers of employees	150	50
Production capacity (units)	100,000	60,000
Space occupied (square feet)	5,000	15,000
Five-year average of S1's service output used	65%	35%

For each of the following allocation bases, determine the total estimated overhead cost for P1 and P2 after allocating S1 cost to the producing departments.

	P1	P2
1. Based on number of employees
2. Production capacity in units
3. Space occupied
4. Five-year average of S1 service used
5. Estimated direct overhead costs

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