Interdepartment Services: Step Method Tucson Manufacturing Company has five oper

Question

Interdepartment Services: Step Method Tucson Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are , S2 and S3). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service deparimenis. service departments ($1 Services provided to Services provided S1 S2 S3 P1 P2 from S1 S2 S3 5% 25% 50% 20% 10%--545 40 20 60 15 5 The direct operating costs of the service departments are as follows: S1 $21,000 S2 255,000 S3 27,000

Explanation / Answer

(15000)

=21000*50/70

(135000)

=225000*45/85

(6750)

=27000*20/80

(6000)

=21000*20/70

(120000)
=225000 * 40/85

(20250)

= 27000 * 60/80

Service Departments Producing departments S1 S2 S3 P1 P2 Total costs 0 0 0 156750 146250

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