Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provided in the following tableSupport Department 1 SupportDepartment 2 ProductionDepartment 1 ProductionDepartment 2Number of employees9 7 25 18 Asset value$1,150 $670 $6,230 $5,100 Department cost$20,000 $15,500 $99,000 $79,000 Using the sequential method of support department cost allocation, determine the total costs from Support Department 1 (assuming they are allocated first) that should be allocated to Support Department 2 and to each of the production departments. SupportDepartment 2 ProductionDepartment 1 ProductionDepartment 2Support Department 1 cost allocation$ $ $ Feedback

Cost allocation is a method of assigning cost of one department to other departments. It helps to…

Answered: Snowy River Stallion Inc. produces…

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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Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provided in the following table

Support Department 1		Support Department 2		Production Department 1		Production Department 2
Number of employees	9		7		25		18
Asset value	$1,150		$670		$6,230		$5,100
Department cost	$20,000		$15,500		$99,000		$79,000

Using the sequential method of support department cost allocation, determine the total costs from Support Department 1 (assuming they are allocated first) that should be allocated to Support Department 2 and to each of the production departments.

	Support Department 2		Production Department 1		Production Department 2
Support Department 1 cost allocation	$		$		$

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