GG Merchandise has two producing and two service departments labeled P1, P2, S1 and S2, respectively. Direct costs for each department and the proportion of service costs used by the various departments are as follows: (P1, P300,000); (P2, P200,000); (S1, P100,000; S2-25%, P1-50%, P2-25%); (S2, P40,000; S1-10%, P1-50%, P2-40%). What is the total cost of P1 if the costs of service departments are allocated using the direct method?

GG Merchandise has two producing and two service departments labeled P1, P2, S1 and S2, respectively. Direct costs for each department and the proportion of service costs used by the various departments are as follows: (P1, P300,000); (P2, P200,000); (S1, P100,000; S2-25%, P1-50%, P2-25%); (S2, P40,000; S1-10%, P1-50%, P2-40%). What is the total cost of P1 if the costs of service departments are allocated using the direct method?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 1CE: Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and...

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