Required information Skip to question [The following information applies to the questions displayed below.] The following information is departmental cost allocation with two service departments and two production departments. Percentage Service Provided to Department Cost S1 S2 P1 P2 Service 1 (S1) $ 47,000 0 % 20 % 40 % 40 % Service 2 (S2) 37,000 20 0 20 60 Production 1 (P1) 270,000 Production 2 (P2) 320,000 What is the total cost in P1 and P2 after allocation using the direct method?

Required information Skip to question [The following information applies to the questions displayed below.] The following information is departmental cost allocation with two service departments and two production departments. Percentage Service Provided to Department Cost S1 S2 P1 P2 Service 1 (S1) $ 47,000 0 % 20 % 40 % 40 % Service 2 (S2) 37,000 20 0 20 60 Production 1 (P1) 270,000 Production 2 (P2) 320,000 What is the total cost in P1 and P2 after allocation using the direct method?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 23E: Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating...

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The following information is departmental cost allocation with two service departments and two production departments.

		Percentage Service Provided to
Department	Cost	S1	S2	P1	P2
Service 1 (S1)	$	47,000			0	%	20	%	40	%	40	%
Service 2 (S2)		37,000			20		0		20		60
Production 1 (P1)		270,000
Production 2 (P2)		320,000

What is the total cost in P1 and P2 after allocation using the direct method?

Expert Solution

Step 1

This question deals with the direct method of cost allocation.

In direct method, service department cost is allocated to production department.

Service department service to other department is not considered in this method.

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