Support department cost allocationreciprocal services method

Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table:

	Maintenance Department	Security Department	Cutting Department	Sewing Department
Machine hours	800	2,000	6,400	11,600
Asset value	$2,000	$1,440	$3,000	$5,000
Department cost	$39,600	$17,600	$67,000	$81,000

Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.

	Cutting Department		Sewing Department
Production departments total costs	$		$

QUESTION 2

Support Department Cost AllocationDirect Method

Yo-Down Inc. produces yogurt. Information related to the companys yogurt production follows:

	Production Department 1		Production Department 2		Production Department 3
Support Department 1 cost driver	2,400		600		1,000

Support Department 1s costs total $140,000. Using the direct method of support department cost allocation, determine the costs from Support Department 1 that should be allocated to each production department.

	Production Department 1		Production Department 2		Production Department 3
Support Department 1 cost allocation	$		$		$