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 — 20 % 30 % ? % S2 20 % — ? 40 The direct operating costs of the departments (including both variable and fixed costs) are: S1 $ 220,000 S2 74,000 P1 61,000 P2 175,000 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 — 20 % 30 % ? % S2 20 % — ? 40 The direct operating costs of the departments (including both variable and fixed costs) are: S1 $ 220,000 S2 74,000 P1 61,000 P2 175,000 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
Problem 1Q
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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:
| From |
To |
||||||||||
| S1 | S2 | P1 | P2 | ||||||||
| S1 | — | 20 | % | 30 | % | ? | % | ||||
| S2 | 20 | % | — | ? | 40 | ||||||
The direct operating costs of the departments (including both variable and fixed costs) are:
| S1 | $ | 220,000 |
| S2 | 74,000 | |
| P1 | 61,000 | |
| P2 | 175,000 | |
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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