Question

Support department cost allocation—comparisonBecker 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 DriverJanitorial Department Square footage to be servicedCafeteria Department Number of employeesJanitorialDepartment CafeteriaDepartment CuttingDepartment AssemblyDepartmentDepartment costs $310,000 $169,000 $1,504,000 $680,000Square feet 50 5,000 1,000 4,000Number of employees 10 3 30 10 Allocated the support department costs to the production departments using the direct method below.CuttingDepartment AssemblyDepartmentJanitorial Department cost allocation $62,000 $248,000Cafeteria Department cost allocation $126,750 $42,250Allocated the support department costs to the production departments using the reciprocal services method below.CuttingDepartment AssemblyDepartmentJanitorial Department cost allocation $38,200 $152,800Cafeteria Department cost allocation $216,000 $72,000Allocated the support department costs to the production departments and Cafeteria Department using the sequential method below.CafeteriaDepartment CuttingDepartment AssemblyDepartmentJanitorial Department cost allocation $155,000 $31,000 $124,000Cafeteria Department cost allocation $243,000 $81,000Compare the total support department costs allocated to each production department under each cost allocation method.a. Which production department is allocated the most support department costs under the direct method?CostAssembly Department $b. Which production department is allocated the most support department costs under the sequential method?CostCutting Department $c. Which production department is allocated the most support department costs under the reciprocal services method?CostCutting Department $

Answer 1

Answer:

a. The most support department cost is allocated to assembly department

b. The most support department costs under the sequential method is allocated to cutting department

c. The most support department costs under the reciprocal services method is allocated to Cutting department .

Explanation:

a. Allocated costs to cutting department = $62000 + $126,750 = $188,750

Allocates costs to assembly department = $248,000 + $42,250 = $290,250

Conclusion: The most support department cost is allocated to assembly department

b. Allocated costs to cutting department = $31,000 + $243,000 = $274,000

Allocates costs to assembly department = $124,000 + $81,000 = $205,000  

Allocates costs to cafeteria department = $155,000

Conclusion:  The most support department costs under the sequential method is allocated to cutting department .

c. Allocated costs to cutting department = $38,200 + $216,000 = $254,200

Allocates costs to assembly department = $152,800 + $72,000 = $224,000

Conclusion: The most support department costs under the reciprocal services method is allocated to Cutting department .