Quillen Company manufactures a product in a factory thathas two production departments, Cutting and Sewing, andtwo support departments, S1 and S2. The activity driver forS1 is number of employees, and the activity driver for S2 isnumber of maintenance hours. The following data pertainto Quillen:Direct costsNormal activity:Number ofemployeesMaintenancehoursRequired:12SupportDepartmentsS1S2Cutting$180 000 $150 000 $122 0001 200ProductionDepartments306316 000Sewing$90 5001474 000Calculate the cost assignment ratios to be used underthe direct method for Departments S1 and S2. (Note:Each support department will have two ratios - onefor Cutting and the other for Sewing.)Allocate the support department costs to theproduction departments by using the direct method.

The direct method is one of the methods of cost allocation where in the total costs of support…

Required: 1 2 Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios - one for Cutting and the other for Sewing.) Allocate the support department costs to the production departments by using the direct method.

Required: 1 2 Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios - one for Cutting and the other for Sewing.) Allocate the support department costs to the production departments by using the direct method.

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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Which one of the following is not a step in allocating the support department cost to the production department? Select one: a. Trace all the overhead cost b. Divide the departments in to support and producing departments c. Undertake a breakeven analysis d. Divide the company in departments
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1. Compute an activity rate for each activity using activity-based costing.
Part 1: Allocate the costs of the 3 service departments using the direct method. Part 2: Allocate the costs of the 3 service departments using the step method, with the order determined by the greater percentage usage. Part 3: Allocate the costs of the 3 service departments using the reciprical method. Part 4:What is one strength and one drawback of each of the methods?
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