Yekka Corporation has two producing department and two service departments labeled P1, P2, S1 and S2, respectively. Direct costs for each department and the proportion of services costs used by...

Yekka Corporation has two producing department and two service departments labeled P1, P2, S1 and S2, respectively. Direct costs for each department and the proportion of services costs used by various departments are as follows:

In calculating predetermined overhead rates, machine hours are used as the base in P1 and direct labor hours as the base in P2.

                                                                        P1                                P2

                        Machine hours                     50,000                         40,000

                        Direct labor hours               40,000                         20,000

Requirements:

1. Allocate the service department costs to operating departments and compute the factory overhead rate for P1 and P2 using the following methods:
   
   
   
   • Direct method
   
   
   • Step method – start with S1
   
   
   • Algebraic method