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Campaign Printing has two service departments, S1 and S2, and two production departments, P1 and P2. The...

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Accounting

Campaign Printing has two service departments, S1 and S2, andtwo production departments, P1 and P2.

The data for May were as follows:

Services provided to:

Activity

Pre-allocation Costs

S1

S2

P1

P2

S1

$90,000

10%

40%

50%

S2

$60,000

20%

55%

25%

Pre-allocation Costs

P1

$360,000

P2

$520,000

Required:

Allocate service departments costs (S1 & S2) to theproduction departments (P1 & P2) using reciprocalmethod

  1. Set up linear equations to solve for the totalcosts incurred in S1 and S2. (Note: if you use repeated iteration,you won’t get any points!!!)
  2. Determine total costs for each department byfirst solving the equations from part i. and then performing thenecessary allocation. (note: round to the nearest integer)

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