Question
Cordner Corporation has two production departments, P1 and P2, and two service departments, S1 and S2. Direct costs for each department and the proportion of
Cordner Corporation has two production departments, P1 and P2, and two service departments, S1 and S2. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows:
| Proportion of Services Used by: | |||||||||||
| Department | Direct costs | S1 | S2 | P1 | P2 | ||||||
| S1 | $ | 66,000 | 0.70 | 0.10 | 0.20 | ||||||
| S2 | $ | 106,000 | 0.20 | 0.30 | 0.50 | ||||||
| P1 | $ | 175,000 | |||||||||
| P2 | $ | 236,000 | |||||||||
Under the direct method of cost allocation, the amount of S1 costs allocated to P1 would be:
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Fundamental accounting principle
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
21st edition
978-0078025587
