Cost Allocations Simultaneous Solution Method—Two Service Departments: A company wants to know if eliminating a service department and replacing services with an outside supplier would be feasible. The center under consideration for elimination is labeled SI. During the past month, the following costs were incurred in the three operating departments and two service departments in the company:

Use of services by other departments is as follows:

Required: Allocate service department costs to P1. P2. and P3 using the simultaneous solution method.

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P1 P3 22 P2 $230,000 615,000 790,000 $1 124,000 $2 109,000