Use the following to answer questions:
A summary of the usage of the service department services by other services departments as well as by two producing departments is as follows:

Direct costs in the various departments are as follows:

-If the direct-method is used, how much of S1's costs would be allocated to S2?
A) $0
B) $21,000
C) $42,000
D) $31,500

Question

Use the following to answer questions:
A summary of the usage of the service department services by other services departments as well as by two producing departments is as follows:
  
Direct costs in the various departments are as follows:
 
-If the direct-method is used, how much of S1's costs would be allocated to S2?
A) $0 
B) $21,000 
C) $42,000 
D) $31,500

Quizplus · Accepted Answer

In the direct method, service department costs are allocated only to operating departments, not to other service departments. Therefore, S1's costs would not be allocated to S2.

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