Question

Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and P2). The distribution of each service department's efforts (in percentages) to the other departments is: To From S1 S2 P1 P2 S1 78 -20% 30% S2 20% 2 40 The direct operating costs of the departments (including both variable and fixed costs) are: Si $255,000 85,000 63,000 P2 185,000 S2 P1 Required: 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method Complete this question by entering your answers in the tabs below S2 85,000 63,000 185,000 P1 P2 Required: 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3 Determine the total cost of P1 and P2 using the direct method. (Do not round intermediate calculations.) Total Cost Allocated Production department1 Production department 2

Answer 1

1. Direct method:

	Total Cost Allocated
Production department 1	$                     138,125
Production department 1	$                     201,875

Working:

	To
From	S1	S2	P1	P2
S1	-	20%	30%	50%
S2	20%	-	40%	40%

Direct Method	Service Departments		Production Departments
	S1	S2	P1	P2	Total
Direct operating costs before interdepartment allocation	255000	85000	63000	185000	588000
Allocation of S1 department costs (30:50)	-255000		95625	159375	0
Allocation of S2 department costs (40:40)	0	-85000	42500	42500	0
Total cost $	0	0	201125	386875	588000

Total costs allocated P1: $95625 + $42500 = $138125

Total costs allocated P2: $159375 + $42500 = $201875