Question
The Josephine Company has 4 departments in its factory consisting of two service departments; S1 and S2, and two production departments; P1 and P2. Each
The Josephine Company has 4 departments in its factory consisting of two service departments; S1 and S2, and two production departments; P1 and P2. Each of the production departments produce a single product. The current costs of each department are:
S1 $34,000
S2 $42,000
P1 $30,000
P2 $20,000
The distribution and consumption of departments' services is given in the following table:
Service provided to:
S1 S2 P1 P2
Services provided by:
S1 - 20% 40% 40%
S2 20% - 30% 50%
What is the total cost incurred by Department P1 after the allocation of the service department costs on the basis of the step-down method?
Select one:
a. $62,200
b. $63,800
c. $79,441
d. $63,250
e. None of the above
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