Cordner Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2. Direct
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Question:
Cordner Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows:
| | Proportion of Services Used by: | |||||||||
Department | Direct costs | S1 | | S2 | | P1 | | P2 | | ||
S1 | $ | 150,000 | | | | 0.70 | | 0.10 | | 0.20 | |
S2 | $ | 182,000 | | 0.20 | | | | 0.30 | | 0.50 | |
P1 | $ | 226,000 | | | | | | | | | |
P2 | $ | 142,000 | | | | | | | | | |
|
Under the step-method of cost allocation, the amount of costs allocated from S2 to P2 would be:
a) $179,375.
b) $91,000.
c) $103,500.
d) $94,250.
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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