Interdepartment Services: Direct Method Tucson Manufacturing Company has five op
ID: 2558618 • Letter: I
Question
Interdepartment Services: Direct Method Tucson Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (S1, 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 departments.
Services provided to
Services
provided
from S1 S2 S3 P1 P2
The direct operating costs of the service departments are as follows:
Using the direct method, prepare a schedule allocating the service department costs to the producing departments.
Do not round while completing your calculations
Service Departments Producing Departments
S1 S2 S3 P1 P2
Total costs $ $ $ $ $
S1 -- 5% 25% 50% 20% S2 10% -- 5 45 40 S3 15 5 -- 20 60Explanation / Answer
Allocation of cost Producing Deptt Servicing Deptt Total Cost S1 S2 S3 P1 $ 31,500 $ 114,750 $ 4,200 $ 150,450 P2 $ 12,600 $ 102,000 $ 12,600 $ 127,200
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