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 4 Janitorial Cafeteria Cutting Assembly Department Department Department Department Department costs $290,000 $180,000 $1,510,000 $670,000 Square feet 48 5,100 600 2,400 Number of employees 12 16 Allocate the support department costs to the production departments using the direct method. Cutting Assembly Department Department Janitorial Department cost allocation Cafeteria Department cost allocation

Answer 1

Allocation of Janitorial Deptt (basis of Sq. ft)
Total Sq. feet area of two production department = 600+2400 = 3000
% of Sq ft area occupied by Cutting =600/3000*100 = 20%
% of Sq ft area occupied by Assembly = 2400/3000*100 = 80%
Janitorial cost allocated:
Cutting department = 290,000*20% =		58,000
Assembly department = 290,000*80% =		2,32,000
Allocation of Cafeteria Department (basis of number of employees)
Total Number of employees = 16+4 = 20
% of employees in Cutting = 16/20 *100 = 80%
% of employees in Assembly = 4/20*100 = 20%
Cafeteria cost allocated
Cutting department = 180,000*80% =		1,44,000
Assembly department = 180,000*20% =		36,000
Final Answer:
				Cutting	Assembly
Janitorial department cost allocated	58,000	2,32,000
Cafeteria department cost allocated	1,44,000	36,000