Interdepartment Services: Direct Method

Tucson Manufacturing Company has five operating departments, two of which are producing departments

$($

P

$1$

$$and P

$2)$

$$and three of which are service departments

$($

S

$1$

$,$

$$S

$2$

$,$

$$and S

$3)$

$.$

$$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 S

$1$

$$S

$2$

$$S

$3$

$$P

$1$

$$P

$2$

$$S

$1$

$-$

$-$

$5$

$\%$

$25$

$\%$

$50$

$\%$

$20$

$\%$

$$S

$210$

$\%$

$-$

$-$

$54540$

$$S

$3155$

$-$

$-$

$2060$

$$

$$

The direct operating costs of the service departments are as follows:

S

$1$

$$$

$35$

$,$

$000$

$$S

$2170$

$,$

$000$

$$S

$315$

$,$

$000$

$$

$$

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 S

$1$

$$S

$2$

$$S

$3$

$$P

$1$

$$P