Answer:
a. $90,875
Explanation:
Provided information we have,
Individually allocated cost
S1 = $62,000 S2 = $102,000 P1 = $162,000 P2 = $142,000
Firstly under step method cost allocation will be from S1 to S2, P1, P2
Ratio = 0.7 : 0.1: 0.2
Thus allocated to S2 = $62,000 0.7 = $43,400
P1 = $62,000 0.1 = $6,200
P2 = $62,000 0.2 = $12,400
Total cost of S2 = $102,000 + $43,400 = $145,400
Ratio between S1: P1: P2 = 0.2:0.3:0.5
Amount allocated to P1 = $145,400
= $54,525
Amount allocated to P2 = $145,400
= $90,875
Therefore, correct option is
a. $90,875