Long Island Manufacturing Company developed the following information for its service departments, S1 and S2, and its production departments, P1 and P2:
-Using the reciprocal method of service department cost allocation,how much is the total overhead cost for P1 for the period if calculations are rounded to the nearest dollar?
A)$25,210
B)$33,188
C)$25,120
D)$25,188

Question

Long Island Manufacturing Company developed the following information for its service departments, S1 and S2, and its production departments, P1 and P2: 
-Using the reciprocal method of service department cost allocation,how much is the total overhead cost for P1 for the period if calculations are rounded to the nearest dollar?
A)$25,210 
B)$33,188 
C)$25,120 
D)$25,188

Quizplus · Accepted Answer

A)S1 = $8,000+ 0.25 [$14,400 + 0.30 (S1)]
S1 = $8,000 + $3,600 + 0.075 (S1)
S1 = $12,540 = $11,600 / 0.925
S2 = $18,162 = $14,400 + 0.30 ($12,540)
$25,210 = $16,000 + 0.30 ($12,540)+ 0.30 ($18,162)

Long Island Manufacturing Company Developed the Following Information for Its