Cost Allocations Direct Method: Thermal Corporation has two producing departments and two service departments labeled PI, P2, SI, and S2, respectively. Direct costs for each department and the proportion of service costs used by the various departments are as follows:

Required: Compute the allocation of service department costs to operating departments, using the direct method.

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Proportion of Services Used by: S2 52 P1 22 P2 .80 .10 .10 .20 - .50 .30 080 Cost Direct Center Costs S1 P1 S1 P2 $90,000 60,000 20,000 - S2 30,000 12