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Sugar Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows:
Used by Department Support Dept. S1 S2 P1 P2
S1 - 10% 40% 50%
S2 20%-50%30% Direct costs $4,500 $8,000 $10,000 $15,000
Required:
Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method.
Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method.
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