Allocate the service department costs to operating departments and compute the factory overhead rate for P1 and P2 using algebraic method. Eastern Corporation has two producing department and two service departmentslabeled P1, P2, SI, and S2, respectively. Direct costs for each department and theproportion of services costs used by various departments are as follows:Proportion of services used by:$2 PLSLP2CostCenterPIP2SIS2DirectCostsP112,50075,00025,00040,000.80.10.20.30In calculating predetermined overhead rates, machine hours are used as the base in Pland direct labor hours as the base in P2.Machine hoursDirect labor hoursA. Direct Methodb. Step method - start with S1Cost Accounting and Controlc. Algebraic methodPl62,50050,000Requirements:1. Allocate the service department costs to operating departments and compute thefactory overhead rate for Pl and P2 using the following methods:.10.50P250,00025,00039

The algebraic method is based on the equation form for allocating the overhead costs of service…

Eastern Corporation has two producing department and two service departments labeled P1, P2, SI, and S2, respectively. Direct costs for each department and the proportion of services costs used by various departments are as follows: Proportion of services used by: S2 SL PL P2 Cost Center PI P2 SI 80 .10 S2 .20 .30 In calculating predetermined overhead rates, machine hours are used as the base in Pl and direct labor hours as the base in P2. Direct Costs P112,500 75,000 25,000 40,000 Machine hours Direct labor hours Cost Accounting and Control A. Direct Method b. Step method - start with S1 c. Algebraic method Pl 62,500 50,000 .10 .50 Requirements: 1. Allocate the service department costs to operating departments and compute the factory overhead rate for Pl and P2 using the following methods: P2 50,000 25,000

Eastern Corporation has two producing department and two service departments labeled P1, P2, SI, and S2, respectively. Direct costs for each department and the proportion of services costs used by various departments are as follows: Proportion of services used by: S2 SL PL P2 Cost Center PI P2 SI 80 .10 S2 .20 .30 In calculating predetermined overhead rates, machine hours are used as the base in Pl and direct labor hours as the base in P2. Direct Costs P112,500 75,000 25,000 40,000 Machine hours Direct labor hours Cost Accounting and Control A. Direct Method b. Step method - start with S1 c. Algebraic method Pl 62,500 50,000 .10 .50 Requirements: 1. Allocate the service department costs to operating departments and compute the factory overhead rate for Pl and P2 using the following methods: P2 50,000 25,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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