Question 4. The Longhorn Company has four departments in its factory with two service departments, S1 and S2, and two production departments, P1 and P2 each of which produces a single product. The current costs of each department are:

Service Departments S1 $84,000 S2 $63,000

Production Departments P1 $90,000 P2 $120,000

The distribution and consumption of services is given in the following table:

Services provided to: S1 S2 P1 P2

Services provided by: S1 40% 25% 35%

S2 10% 70%20%

Required: a) Allocate service department costs to production departments using the direct method. b) Allocate service department costs to production departments using the step-down method. c) Allocate service department costs to production departments using the reciprocal method to the nearest dollar.