Tucson Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (S1, S2, and S3). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service departments.
| Services Provided From |
S1 |
S2 |
S3 |
P1 |
P2 |
|
S1
|
-- |
5% |
25% |
50% |
20% |
| S2 |
10% |
-- |
5 |
45 |
40 |
| S3 |
15 |
5 |
-- |
20 |
60 |
The direct operating costs of the service departments are as follows:
S1 -- $49,000
S2 -- $93,500
S3 -- $18,000
Using the direct method, prepare a schedule allocating the service department costs to the producing departments.
Do not round while completing your calculations.
Could you please explain how to get the correct answers for this problem? Thanks!