Chapter 11, Problem 57P

Solve for Unknowns: Step Method

RT Renovations is organized with two service departments (S1 and S2) and two production departments (P1 and P2). The company uses the step method to allocate service department costs, allocating from S1 to S2, P1, and P2 first. The cost accountant tells you that in November, $100,000 was allocated from S2 to P1 (including any cost allocated from S1 to S2). She also tells you that $50,000 was allocated from S1 to S2 in November.

  P1 used 20 percent of S2 services and P2 used 60 percent of S2 services in November. Finally, S2 used 20 percent of S1 services in November.

Required

1. a.         What are the total costs incurred by S1 in November?
2. b.         What are the total costs incurred by S2 (before any allocations) in November?