Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human General Resources Factory Fabricating Assembly Direct costs $170,000 $350,000 $114,800 $95,000 Normal activity: Number of employees 60 s0 170 Square footage 1,000 5,700 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. Valron Company uses the direct method of support department cost allocation. I on Required: 1. Calculate the allocation ratios for the four departments using the direct method. Ir an amount is zero, enter "0". Round your answer to the nearest cent. Proportion of Driver Used by Human Resources General Factory Fabricating Assembly Human Resources General Factory 2. Using the direct method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter "0". Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs Allocate: Human Resources General Factory Total after allocation

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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Direct Method of Support Department Cost Allocation

Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.

	Support Departments	Producing Departments
	Human Resources	General Factory	Fabricating	Assembly
Direct costs	$170,000	$350,000	$114,800	$95,000
Normal activity:
Number of employees	—	60	80	170
Square footage	1,000	—	5,700	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. Valron Company uses the direct method of support department cost allocation.

Required:

Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.
Support Departments
Producing Departments
Human
General
Resources
Factory
Fabricating
Assembly
Direct costs
$170,000
$350,000
$114,800
$95,000
Normal activity:
Number of employees
60
80
170
Square footage
1,000
5,700
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. Valron Company uses the direct method of support department cost allocation.
Required:
1. Calculate the allocation ratios for the four departments using the direct method. If an amount is zero, enter "0". Round your answer to the nearest cent.
Proportion of Driver Used by
Human Resources
General Factory
Fabricating
Assembly
Human Resources
General Factory
2. Using the direct method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter "0".
Support Departments
Producing Departments
Human Resources
General Factory
Fabricating
Assembly
Direct costs
Allocate:
Human Resources
General Factory
Total after allocation

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