Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is the number of employees, and the activity driver for S2 is the number of maintenance hours. The following data pertain to Quillen: REQUIRED: (a) Calculate the cost assignment ratios to be used under the reciprocal method for S1, S2, Cutting, and Sewing. Carry out your answers to four decimal places. (b) Allocate the overhead costs to the producing departments by using the reciprocal method. (c) What methods can managers use to allocate costs of multiple support departments to operating departments? Explain the difference between these methods.
Quillen Company manufactures a product in a factory that has two producing
departments, Cutting and Sewing, and two support departments, S1 and S2. The activity
driver for S1 is the number of employees, and the activity driver for S2 is the number of
maintenance hours. The following data pertain to Quillen:
REQUIRED:
(a) Calculate the cost assignment ratios to be used under the reciprocal method for S1,
S2, Cutting, and Sewing. Carry out your answers to four decimal places.
(b) Allocate the
method.
(c) What methods can managers use to allocate costs of multiple support departments
to operating departments? Explain the difference between these methods.
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