Interdepartment Services: Step Method
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 to
|
|
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
|
$63,000
|
|
S2
|
255,000
|
|
S3
|
21,000
|
Refer to the data above. Using the step method, prepare a schedule for Tucson Manufacturing Company allocating the service department costs to the producing departments. (Round calculations to the nearest dollar.)
|
Service Departments
|
Producing Departments
|
|
S1
|
S2
|
S3
|
P1
|
P2
|
|
Total costs
|
|
|
|
|
|