Brandeis Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows:
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Proportion of Services Used by:
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Department
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Direct costs
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S1
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S2
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P1
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P2
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S1
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$70,000
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0.70
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0.10
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0.20
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S2
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$110,000
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0.20
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0.30
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0.50
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P1
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$170,000
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P2
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$150,000
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Under the step-method of cost allocation, the amount of costs allocated from S2 to P2 would be:
$99,375.
$55,000.
$68,750.
$56,750.