Direct, sequential, and reciprocal allocation Ming Company has two service departments (S1 and S2) and two production departments (P1 and P2). Last year, directly identified overhead costs were $255,000 for S1 and $320,000 for S2. Information on the consumption of their services follows: Supplying User Departments Departments S1 S2 P1 P2 S1 500 1,200 6,000 1,300 S2 800 200 7,000 9,000 (a) Determine the service department costs allocated to the two production departments using the direct method. Note: Round each rate to two decimal places before calculating the allocated amounts. Round answers to the nearest dollar. Rate Total (rounded to 2 decimals) Total P1 Total P2 (any diff due to rounding) S1 allocation amount Answer Answer Answer S1 allocation amount Answer Answer Answer Total service department costs Answer Answer Answer (b) Determine the service department costs allocated to the two production departments using the sequential method beginning with the allocation of S1 department costs. Note: Round each rate to two decimal places before calculating the allocated amounts. Round answers to the nearest dollar. Total allocated service department costs P1 Answer P2 Answer Total (any diff due to rounding) Answer (c) Determine the service department costs allocated to the two production departments using the reciprocal method. Note: Do not round your computations; however, round your final answers to the nearest dollar. Total allocated service department costs P1 Answer P2 Answer Answer

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Direct, sequential, and reciprocal allocation
Ming Company has two service departments (S1 and S2) and two production departments (P1 and P2). Last year, directly identified overhead costs were $255,000 for S1 and $320,000 for S2.
Information on the consumption of their services follows:

Supplying	User Departments
Departments	S1	S2	P1	P2
S1	500	1,200	6,000	1,300
S2	800	200	7,000	9,000

(a) Determine the service department costs allocated to the two production departments using the direct method.
Note: Round each rate to two decimal places before calculating the allocated amounts. Round answers to the nearest dollar.

	Rate			Total
	(rounded to 2 decimals)	Total P1	Total P2	(any diff due to rounding)
S1 allocation amount	Answer	Answer	Answer
S1 allocation amount	Answer	Answer	Answer
Total service department costs		Answer	Answer	Answer

(b) Determine the service department costs allocated to the two production departments using the sequential method beginning with the allocation of S1 department costs.
Note: Round each rate to two decimal places before calculating the allocated amounts. Round answers to the nearest dollar.

	Total allocated service
	department costs
P1	Answer
P2	Answer
Total (any diff due to rounding)	Answer

Note: Do not round your computations; however, round your final answers to the nearest dollar.

	Total allocated service
	department costs
P1	Answer
P2	Answer
	Answer

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