Arctic Tundra 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 DepartmentSupport Dept.S1S2P1P2 S1-10%40%50% S220%-50%30%Direct costs$4,500$8,000$10,000$15,000Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department.Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.

Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

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Essentials of Business Analytics (MindTap Course List)

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Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

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Arctic Tundra 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

Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department.
Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.

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