eBookQuestion Content AreaDirect Method of Support Department Cost AllocationChekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support DepartmentsProducing Departments HumanResourcesGeneralFactoryFabricatingAssemblyDirect costs$170,000$350,000$114,800$95,000Normal activity: Number of employees—604580Square footage1,500—6,00014,000The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Chekov Company uses the direct method of support department cost allocation.Required:

Producing Department Allocated as: Direct CostProducing Department FabricatingAssemblyHuman…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Direct Method of Support Department Cost Allocation

Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.

	Support Departments	Producing Departments
	Human Resources	General Factory	Fabricating	Assembly
Direct costs	$170,000	$350,000	$114,800	$95,000
Normal activity:
Number of employees	—	60	45	80
Square footage	1,500	—	6,000	14,000

The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Chekov Company uses the direct method of support department cost allocation.

Required:

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