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: From To 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 69,000 P1 56,000 P2 150,000 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.
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: From To 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 69,000 P1 56,000 P2 150,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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: From To 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 69,000 P1 56,000 P2 150,000 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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Step 1: Direct method
VIEWStep 2: Calculation showing the service department’s efforts (in percentages):
VIEWStep 3: Calculation showing the total overheads after allocation by direct method and step method:
VIEWStep 4: Calculation showing the total overheads after allocation by reciprocal method:
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