Question
Ming Company has two service departments (S1 and S2) and two production departments (P1 and P2). Last year, directly identified overhead costs were $255,000 for
Ming Company has two service departments (S1 and S2) and two production departments (P1 and P2). Last year, directly identified overhead costs were $255,000 for S1 and $320,000 for S2.
Information on the consumption of their services follows:
Supplying | User Departments | |||
---|---|---|---|---|
Departments | S1 | S2 | P1 | P2 |
S1 | 500 | 1,200 | 6,000 | 1,300 |
S2 | 800 | 200 | 7,000 | 9,000 |
(a) Determine the service department costs allocated to the two production departments using the direct method.
Note: Round each rate to two decimal places before calculating the allocated amounts. Round answers to the nearest dollar.
Rate | Total | |||
---|---|---|---|---|
(rounded to 2 decimals) | Total P1 | Total P2 | (any diff due to rounding) | |
S1 allocation amount | ||||
S1 allocation amount | ||||
Total service department costs |
(b) Determine the service department costs allocated to the two production departments using the sequential method beginning with the allocation of S1 department costs.
Note: Round each rate to two decimal places before calculating the allocated amounts. Round answers to the nearest dollar.
Total allocated service | |
---|---|
department costs | |
P1 | |
P2 | |
Total (any diff due to rounding) |
(c) Determine the service department costs allocated to the two production departments using the reciprocal method.
Note: Do not round your computations; however, round your final answers to the nearest dollar.
Total allocated service | |
---|---|
department costs | |
P1 | |
P2 | |
Step by Step Solution
3.51 Rating (158 Votes )
There are 3 Steps involved in it
Step: 1
answer c Let Total overhead cost of S1 a Total overhead cost of S2 b a 25500...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started