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A Corporation has two service departments, S1 and S2, and three production departments, P1, P2,...

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Accounting

A Corporation has two service departments, S1 and S2, and three production departments, P1, P2, and P3. Data for a recent month follow:

Service Provided to: S1 S2 P1 P2 P3

S1 * 0.10 0.20 0.40 0.30

S2 0.30 * 0.20 0.40 0.10

Costs $200,000 $100,000 $600,000 $800,000 $1,000,000

Required:

a. Compute the allocation of service department costs to producing departments using the direct method.

b. Compute the allocation of service department costs to producing departments using the step-down method.

c. Compute the allocation of service department costs to producing departments using the reciprocal method.

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