Service department cost allocation I\'ve done the question myself and it is perf

Question

Service department cost allocation

I've done the question myself and it is perfect, the only thing i'm finding impossible for me is the last part, the T-Accounts for Overheads, please provide proper T-Accounts with all the data needed in it. You can just do it for the direct method and i can do the rest. Just in case you dont want to waste time on solving these i'll give to the answer for direct method, S1 $20,000 will be reallocated to P1 $15,000 and P2 $5,000, and S2 $25,000 to P1 $10,294 and P2 $14,706. Total costs are P1 $85,294 and P2 $64,706

Thanks.

A firm has two service departments, S1 and S2, and two production departments, P and P2. The primary allocation of indirect manufacturing expenses is as follows S2 $25 000 Total. S150 000 $20 000 S60 000 $45 000 The percentage allocation of service centre costs is: Pi 60 35 P2 20 50 Total 100 100 20 15 Re-allocate the service centre costs to the production departments by (a) the direct method (b) the step method (c) the reciprocal services method Required 1. Create a manual, handwritten solution. Scan or use your phone to copy and paste an image in your assignment. If using a smart phone, consider using a free scanning app such as Camscanner, Office Lens or Google Drive or search for an app. Let us know which app you chose Use the algebraic method for the reciprocal services method 2. Solve with a spreadsheet. Also show the Matrix algebra solution. Include in your solutions the T accounts for Overhead as shown on page 93 of your text.

Explanation / Answer

a) S1 S2 P1 P2 Expenses 20000 25000 60000 45000 Allocation: S1 15000 5000 S2 10294 14706 Total cost 85294 64706 b) S1 S2 P1 P2 Expenses 20000 25000 60000 45000 Allocation: S1 -20000 4000 12000 4000 total   0 29000 72000 49000 S2 -29000 11941 17059 Total cost 83941 66059 c) S1 S2 P1 P2 Expenses 20000 25000 60000 45000 Allocation: S1 -20000 4000 12000 4000 total   0 29000 72000 49000 S2 4350 -29000 10150 14500 total   4350 0 82150 63500 S1reciprocal -4350 3263 1087 Total cost 0 85413 64587 Journal entry with Direct method of allocation of service costs: Accounts Titles Debit $ Credit $ Debit WIP - P1(85294-60000) 25294 Credit Manufacturing Overhead 25294 (allocation to P1) Debit WIP - P2(64706-45000) 19706 Credit Manufacturing Overhead 19706 (allocation to P2)

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