Support Department Cost Allocation—Direct Method Yo-Down Inc. produces yogurt. Information related to the company’s yogurt production...

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Support Department Cost Allocation—Direct Method Yo-Down Inc. produces yogurt. Information related to the company’s yogurt production...

Support Department Cost Allocation—Direct Method

Yo-Down Inc. produces yogurt. Information related to the company’s yogurt production follows:

	Production Department 1		Production Department 2		Production Department 3
Support Department 1 cost driver	1,400		100		500

Support Department 1’s costs total $142,000. 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

business accounting

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Answer 1

Answer #1

Support department total cost drivers = Production Department 1 + Production Department 2 + Production Department 3

= 1,400+100+500

= 2,000

	Production Department 1		Production Department 2		Production Department 3
Support Department 1 allocation	142,000 x 1,400/2,000 = $99,400		142,000 x 100/2,000 = $7,100		142,000 x 500/2,000 = $35,500

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Answer 2

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