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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:
Proportion of Services Used by:
Department
Direct costs
S1
S2
P1
P2
$70,000
0.70
0.10
0.20
$110,000
0.30
0.50
$170,000
$150,000
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.
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