Reference no: EM132552739

The Josephine Company has 4 departments in its factory consisting of two service departments; S1 and S2, and two production departments; P1 and P2. Each of the production departments produce a single product.

The current costs of each department are:

S1         $34,000

S2        $42,000

P1        $30,000

P2         $20,000

The distribution and consumption of departments' services is given in the following table:

Service provided to: S1   S2    P1      P2

Services provided by:

S1         -20%          40%         40%

S2         20%          -30%         50%

Question 1: What is the total cost incurred by Department P1 after the allocation of the service department costs on the basis of the step-down method?

Select one:

a. $62,200

b. $63,800

c. $79,441

d. $63,250

e. None of the above