Interdepartment Services: Direct Method Wilhelm Manufacturing Company has five operating departments, two of which are producing departments
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Interdepartment Services: Direct Method Wilhelm Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (S1, S2, and S3). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service departments.
Services provided from | Services Provided to | ||||
---|---|---|---|---|---|
S1 | S2 | S3 | P1 | P2 | |
S1 | -- | 5% | 25% | 50% | 20% |
S2 | 10% | -- | 5 | 45 | 40 |
S3 | 15 | 5 | -- | 20 | 60 |
The direct operating costs of the service departments are as follows:
S1 | $ 98,000 |
S2 | 187,000 |
S3 | 36,000 |
Using the step method, devise a schedule for Wilhelm Manufacturing Company allocating the service department costs to the producing departments. (Round calculations to the nearest dollar. Do not round until your final answers.)
Service Departments | Producing Departments | ||||
---|---|---|---|---|---|
S1 | S2 | S3 | P1 | P2 | |
Total costs |
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