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LO 7 (Appendix) 4-38 Direct, sequential, and reciprocal allocation Ming Company has two service departments (S1 and S2) and two production departments (P1 and P2).
LO 7 (Appendix) 4-38 Direct, sequential, and reciprocal allocation Ming Company has two service departments (S1 and S2) and two production departments (P1 and P2). Last year, directly identified overhead costs were $300,000 for S1 and $300,000 for S2. Information on the consumption of their services follows: USER DEPARTMENTS SUPPLYING DEPARTMENTS SI $2 PI P2 SI $2 25% 0% 40% 30% 30% 0% 25% 50% Required (a) Determine the service department costs allocated to the two production departments using the direct method. (b) Determine the service department costs allocated to the two production departments using the sequential method beginning with the allocation of S1 department costs. Chapter 4 Accumulating and Assigning Costs to Products 179 (c) Determine the service department costs allocated to the two production departments using the reciprocal method
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