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?
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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