Direct method

S1 S2 P1
Unadjusted balance 20,000.00 32,000.00 90,000.00
Allocate S1 to P1 and P2
P1 (10% / 20%) - 10,000.00 10,000.00
P2 (10% / 20%) - 10,000.00
Allocate S2 to P1 and P2
P1 (50% / 80%) - 20,000.00 20,000.00
P2 (30% / 80%) - 12,000.00
Adjusted balances 120,000.00
Machine hours 50,000.00
Direct labor hours
Deparmentalized overhead rate 2.40

Adjusted balances 120,000.00

Direct labor hours 40,000
Deparmentalized overhead rate 3.00
P2
60,000.00

10,000.00

12,000.00
82,000.00

20,000
4.10

82,000.00
20,000
4.10
Step method

S1 S2 P1
Unadjusted balance 20,000.00 32,000.00 90,000.00
Allocate S2 to S1, P1 and P2
S1 - 20% 6,400.00 - 6,400.00
P1 - 50% - 16,000.00 16,000.00
P2 - 30% - 9,600.00
Allocate S1 to P1 and P2
P1 (10% / 20%) - 13,200.00 13,200.00
P2 (10% / 20%) - 13,200.00
Adjusted balances 119,200.00
Machine hours 50,000
Direct labor hours
Deparmentalized overhead rate 2.38

Adjusted balances 119,200.00

Direct labor hours 40,000
Deparmentalized overhead rate 2.98
P2
60,000.00

9,600.00

13,200.00
82,800.00

20,000
4.14

82,800.00
20,000
4.14
Step method

S1 S2 P1
Unadjusted balance 20,000.00 32,000.00 90,000.00
Allocate S1 to S2, P1 and P2
S2 - 80% - 16,000.00 16,000.00
P1 - 10% - 2,000.00 2,000.00
P2 - 10% - 2,000.00
Allocate S2 to P1 and P2
P1 (50% / 80%) - 30,000.00 30,000.00
P2 (30% / 80%) - 18,000.00
Adjusted balances 122,000.00
Machine hours 50,000
Direct labor hours
Deparmentalized overhead rate 2.44

Adjusted balances 122,000.00

Direct labor hours 40,000
Deparmentalized overhead rate 3.05
P2
60,000.00

2,000.00

18,000.00
80,000.00

20,000
4.00

80,000.00
20,000
4.00
Algebraic / reciprocal method

S1 S2 P1
Unadjusted balance 20,000.00 32,000.00 90,000.00
Allocate S1 to S2, P1 and P2
S2 - 80% - 25,142.86 25,142.86
P1 - 10% - 3,142.86 3,142.86
P2 - 10% - 3,142.86
Allocate S1 to S2, P1 and P2
S1 - 20% 11,428.57 - 11,428.57
P1 - 50% - 28,571.43 28,571.43
P2 - 30% - 17,142.86
Adjusted balances 121,714.29
Machine hours 50,000
Direct labor hours
Deparmentalized overhead rate 2.43

Adjusted balances 121,714.29

Direct labor hours 40,000
Deparmentalized overhead rate 3.04
P2
60,000.00

3,142.86

17,142.86
80,285.72

20,000
4.01

80,285.72
20,000
4.01