Support Department Cost Allocation Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Used by Department Support Dept. S1 S2 P1 P2 S1 - 10% 40% 50% S2 20% - 50% 30% Direct costs $4,500 $8,000 $10,000 $15,000 Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
Support Department Cost Allocation Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Used by Department Support Dept. S1 S2 P1 P2 S1 - 10% 40% 50% S2 20% - 50% 30% Direct costs $4,500 $8,000 $10,000 $15,000 Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Support Department Cost Allocation
Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2).
Estimated direct costs and percentages of services used by these departments are as follows:
|
Used by Department |
||||
|
Support Dept. |
S1 |
S2 |
P1 |
P2 |
|
S1 |
- |
10% |
40% |
50% |
|
S2 |
20% |
- |
50% |
30% |
|
Direct costs |
$4,500 |
$8,000 |
$10,000 |
$15,000 |
- Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department.
- Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
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