Question

Support Department Cost Allocation-Direct Method Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 9 and 81 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows: Maintenance Department $6,000 Janitorial Department 3,000 Cutting Department 53,000 Pruning Department 13,000 Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production departments. Cutting Pruning Department Department Production departments total costs $

Answer 1

Calculate production department total cost

	Cutting department	Pruning department
Direct cost	53000	13000
Maintenance department cost	6000*9/10 = 5400	600
Janitorial department	3000*9/90 = 300	2700
Production departments' total Cost	58700	16300