Question

Support department cost allocation-direct method Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows: Support Department Cost Driver Janitorial Department Square footage to be serviced Cafeteria Department Number of employees Janitorial Cafeteria Cutting Assembly Department Department Department Department Department costs $310,000 $169,000 $1,504,000 $680,000 Square feet 50 5,000 1,000 4,000 Number of employees 10 3 30 10 Allocate the support department costs to the production departments using the direct method. Cutting Department Assembly Department Janitorial Department cost allocation $ -31,000 x $ 124,000 x Cafeteria Department cost allocation -32,400 X $ 81,000 x Feedback Check My Work The direct method allocates all support department costs directly to production departments. The usage of the support department cost drivers by each department must be determined. Under the direct method, any inter-support-department usages are ignored. The percentage usage of support department cost drivers by the production departments is determined. The support department costs are allocated to the production departments by multiplying the percentage usage of each production department by the total support department costs.

Answer 1

Allocation of Costs using Direct Method
	Support Deptt.	Production Deptt.
	Janitorial	Cafeteria	Cutting	Assembly
Costs	310000	169000	1504000	680000
Allocation of Janitorial Deptt. Cost
using square feet
Ratio 1:4	-310000	0	62000	248000
Allocation of Production Deptt. Cost
using No. of Employees
Ratio 3:1	0	-169000	126750	42250