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Problem 5 Eastern Corporation has two producing department and two service departments labeled PI, P2, S1, and $2, respectively. Direct costs for each department and the proportion of services costs used by various departments are as follows: Proportion of services used by: Cost Direct Costs $1 $2 PI P2 Center P 1 12,500 P2 75,000 SI 25,000 .80 .10 .10 $2 40,000 .20 .50 .30 In calculating predetermined overhead rates. machine hours are used as the base in P1 and direct labor hours as the base in P2. P1 P2 Machine hours 62,500 50,000 Direct labor hours 50,000 25,000 Requirements: 1. Allocate the service department costs to operating departments and compute the factory overhead rate for PI and P2 using the following methods: A. Direct Method b. Step method - start with SI c. Algebraic method 2. Assume the company uses just one basis for applying overhead to jobs going base. through both PI and P2, compute the overhead rate using direct labor hours as