Question

♡ BE 19-2 Support Department Cost Allocation-Sequential Method Obj. 3 Bucknum Boys, Inc., produces hunting gear for buck hunting. The company's main production departments are Molding and Finishing. Production of the hunting gear cannot be accomplished without the supporting tasks of Materials Management and meals for production employees provided by the Cafeteria. Cafeteria costs are always higher than Materials Management costs. The company believes that the number of employees in each department is the best driver of Cafeteria costs. The number of employees in each department is as follows: Molding Department Finishing Department Materials Management Department Cafeteria Department mo The company also believes that the value of support materials used in each department is the best driver for Materials Management costs. The support materials used in the Molding and Finishing departments are valued at $1,800 and $2,700, respectively. Using the sequential method for support department cost allocation (allocating Cafeteria costs first), determine (a) the percentage of Cafeteria costs that should be allocated to the Molding Department and (b) the percentage of Materials Management costs that should be allocated to the Finishing Department.

Answer 1

Answer

• Working

	Cafetaria	Materials Management	Finishing	Molding	Total
Total employees no for allocation		3	30	27	60
% of total 60 employees		5% [3/60]	50% [30/60]	45% [27/60]	100%
Total Support material cost for allocation			2700	1800	4500
% of total cost for allocation			60%	40%	100%

• Requirement [a]
  % of cafetaria cost to be allocated to Molding Department =45%
• Requirement [b]
  % of material management cost to be allocated to Finishing Department = 60%