Sabina Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly     Support Department Producing Department   Human Resources General Factory Fabricating Assembly Direct costs $150,000 $320,000 $134,600 $193,000 Normal activity:   -   50   40   90 Number of employees Square footage 2000 - 6,700 13,300     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. Sabina Company uses the direct method of support department cost allocation.    Required: 1. Calculate the allocation ratios (using direct method) 2. Using the direct method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. 3. What if the General Factory Department had 40 employees? How would that affect the allocation of Human Resources Department costs to the Fabricating and Assembly departments?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sabina Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly

 

 

Support Department

Producing Department

 

Human Resources

General Factory

Fabricating

Assembly

Direct costs

$150,000

$320,000

$134,600

$193,000

Normal activity:

 

-

 

50

 

40

 

90

Number of employees

Square footage

2000

-

6,700

13,300

 

 

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. Sabina Company uses the direct method of support department cost allocation.

 

 Required:

1. Calculate the allocation ratios (using direct method)

2. Using the direct method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments.

3. What if the General Factory Department had 40 employees? How would that affect the allocation of Human Resources Department costs to the Fabricating and Assembly departments?

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