Question

Cordner 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: Proportion of Services Used by: DepartmentDirect costsS1 S2 P1 P2 S1$66,000 0.70 0.10 0.20 S2$161,000 0.20 0.30 0.50 P1$166,000 P2$233,000 Under the step method of cost allocation, the amount of S2 costs allocated to S1 would be:

Answer 1

$46,200

Step-by-step explanation:

Calculation to determine the amount of S2 costs allocated to S1

S2 costs allocated to S1 =$66,000*0.70/(0.70 +0.10+ 0.20)

S2 costs allocated to S1 =$46,200/1.00

S2 costs allocated to S1 =$46,200

Therefore Under the step method of cost allocation, the amount of S2 costs allocated to S1 would be:$45,200