Question

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 Department Cafeteria Department Cutting Department Assembly 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

Allocated the support department costs to the production departments using the direct method below.

Cutting Department Assembly Department
Janitorial Department cost allocation $62,000 $248,000
Cafeteria Department cost allocation $126,750 $42,250

Allocated the support department costs to the production departments and Cafeteria Department using the sequential method below.

Cafeteria Department Cutting Department Assembly Department

Janitorial Department cost allocation $155,000 $31,000 $124,000
Cafeteria Department cost allocation $243,000 $81,000

Compare the total support department costs allocated to each production department under each cost allocation method.

Required:
a. Which production department is allocated the most support department costs under the direct method?
b. Which production department is allocated the most support department costs under the sequential method?
c. Which production department is allocated the most support department costs under the reciprocal services method?

Answer 1

Answer:

A.Allocates costs to assembly department = $290,250

B.Allocated costs to cutting department =$274,000

C.Allocated costs to cutting department =$254,200

Explanation:

A. Calculation for the production department that is allocated the most support department costs under the direct method

Allocated costs to cutting department =

($62,000+ $126,750)

Allocated costs to cutting department=$188,750

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

Allocates costs to assembly department = $290,250

Based on the above calculation the production department that is allocated the most support department costs will be Assembly department because it has the highest allocated costs of the amount of $290,250

B) Calculation for the production department that is allocated the most support department costs under the sequential method

Allocated costs to cutting department = ($ 31,000+ $243,000)

Allocated costs to cutting department =$274,000

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

Allocates costs to assembly department = $205,000

Allocates costs to cafeteria department =$155,000

Based on the above calculation the production department that is allocated the most support department costs will be Cutting department because the department had the highest allocated costs of the amount of $274,000

C) production department is allocated the most support department costs under the reciprocal services method?

Allocated costs to cutting department = ($ 38200+ $216000) =$254200 ( most support cost allocated to Cutting department

Allocates costs to assembly department = ($152800+$72000) = $224000