Problem

Departmental Cost AllocationRobinson Products Company has two service departments (S1 and...

Departmental Cost Allocation

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

10%

20%

?%

S2

10%

?%

30%

The direct operating costs of the departments (including both variable and fixed costs) are

S1

$180,000

S2

60,000

P1

50,000

P2

120,000

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.

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