Reference no: EM132735798

Problem 1: Alsfeld Company has two service departments (S1 and $2) and two producing departments (A and B). Department S1 serves Departments S2, A, and B in the following percentages, respectively: 10%, 35%, and 55%. Department S2 serves Departments S1, A, and B in the following percentages, respectively: 0%, 60%, and 40%. Direct department costs for S1, $2, A, and B are $300,000, $32,000, $420,000, and $390,000, respectively. If Alsfeld uses the step method of allocating service department costs beginning with department $1, what is the total amount of cost that will be allocated from $2 to department A?

Option 1: $12,800

Option 2: $105,000

Option 3: $37,200

Option 4: -0-