Interdepartment Services: Direct Method Wilhelm Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (51, 52, and 53). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service departments. Services provided Services Provided to from 51 52 53 P1 P2 |SW|25% 50% 20% 10% 5 45 40 15 5 20 60 The direct operating costs of the service departments are as follows: $1$ 98,000 $2 187,000 53 36,000 Using the step method, prepare a schedule for Wilhelm Manufacturing Company allocating the service department costs to the producing departments (Round calculations to the nearest dollar. Do not round until your final answers) Service Departments 52 51 Total costs $ Check 53 ous OUS 0 Producing Departments P1 P2 162,740 x 158,260 $

Support department cost allocation Hooligan Adventure Supply produces and sells various outdoor equipment. The Molding and Assembly production departments are supported by the Personnel and Maintenance departments. Personnel costs are allocated to the production departments based on the number of employees, and Maintenance costs are allocated based on number of service calls. Information about these departments is detailed in the following table: Line Item Description PersonnelDepartment MaintenanceDepartment MoldingDepartment AssemblyDepartment Number of employees 28      10        41        49       Number of service calls 57      41        168        112       Department cost $15,000      $11,400        $72,000        $69,000       1. Which of the following statements matches the sequential method of cost allocations?a. Support departments are often allocated in order from lowest to the highest cost with preference given to the departments that serve few support…

A-5

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2

Required information SB (Static) The following information is... [The following information applies to the questions displayed below.] The following information is departmental cost allocation with two service departments and two production departments. Percentage Service Provided to Department Service 1 (S1) Service 2 (52) Production 1 (P1) Production 2 (P2) P1 P2 Cost $ 30,000 20,000 100,000 150,000 Total Cost Allocated S1 0% 20 P2 35% 20 60 Brief Exercise 7-14 (Static) If the cost in P1 is changed from... [LO 7-3] What is the amount of service department cost allocated to P1 and P2 using the direct method if the cost in P1 is changed from $100,000 to $120,000? 52 P1 30% 35% 0

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