Question

Interdepartment Services: Direct Method Wilhelm 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 5% 25% 50% 20 % S1 S2 10% 5 45 40 S3 15 5 20 60 The direct operating costs of the service departments are as follows: S1 $98,000 S2 187,000 S3 36,000 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 S1 S2 S3 P1 P2 Total costs $ 162,740 $ 0 $ 0 $ $ 0 158,260

Answer 1

Allocation

	S1	S2	S3	P1	P2
Service department cost	98000	187000	36000
Allocation of S1	-98000			70000	28000
Allocation of S2		-187000		99000	88000
Allocation of S3			-36000	9000	27000
Total Cost				178000	143000