Homework Answers
| From | S1 | S2 | P1 | P2 |
| S1 | 20% | 30% | 50% | |
| S2 | 20% | 40% | 40% |
1. Direct method:
| S1 | S2 | P1 | P2 | |
| Direct operation cost | 235000 | 77000 | 64000 | 190000 |
| S1 (30:50) | -235000 | 88125 | 146875 | |
| S2 (40:40) | -77000 | 38500 | 38500 | |
| Total cost | 190625 | 375375 |
2. Step method:
| S1 | S2 | P1 | P2 | |
| Direct operation cost | 235000 | 77000 | 64000 | 190000 |
| S1 (20:30:50) | -235000 | 47000 | 70500 | 117500 |
| S2 (40:40) | -124000 | 62000 | 62000 | |
| Total cost | 196500 | 369500 |
3. Reciprocal method:
Workings:
Let X be the total cost of S1 Department
& Y be the total cost of S2 Department
Then, the equations will be:
- X = $235000 + 0.2 Y ...................... (1)
- Y = $77000 + 0.2 X ...................... (2)
Solving the Above Two Equation:
X = $235000 + 0.2 ($77000 + 0.2 X)
X = 235000 + 15400 + 0.04X
X = 260833
Y = $77000 + 0.2 (260833)
Y = 129167
Hence, Total cost of S1 Dept. = $260833 & S2 Dept. = $129167
| S1 | S2 | P1 | P2 | |
| Direct operation cost | 235000 | 77000 | 64000 | 190000 |
| S1 (20:30:50) | -260833 | 52167 | 78250 | 130416 |
| S2 (20:40:40) | 25833 | -129167 | 51667 | 51667 |
| Total cost | 193917 | 372083 |
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