Question - The following information is departmental cost allocation with two service departments and two production departments.
Department Cost S1 S2 P1 P2
Service 1 (S1) $35,000 0% 40% 45% 15%
Service 2 (S2) $25,000 20% 0% 20% 60%
Production 1 (P1) $150,000
Production 2 (P2) $200,000
1. What is the amount of service department cost allocated to P1 and P2 using the step method with S1 going first?
2. What is the amount of service department cost allocated to P1 and P2 using the direct method if the cost in P1 is changed from $150,000 to $170,000.