Cordner Corporation Has Two Production Departments, P1 and P2, and Two

Multiple Choice

Cordner Corporation has two production departments, P1 and P2, and two service departments, S1 and S2. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows:
$$\begin{array}{r} { \text { Proportion of Services Used by: } } \\ \begin{array} { c l c c c c } \text { Department } & \text { Direct costs } & \text { S1 } & \text { S2 } & \text { P1 } & \text { P2 } \\\text { S1 } & \$ 60,000 & & 0.70 & 0.10 & 0.20 \\\text { S2 } & \$ 100,000 & 0.20 & & 0.30 & 0.50 \\\text { P1 } & \$ 160,000 & & & & \\\text { P2 } & \$ 140,000 & & & &\end{array}\end{array}$$
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Under the step method of allocation, the total amount of service costs allocated to producing departments would be:

A) $118,000.
B) $160,000.
C) $140,000.
D) $40,000.