Question

Direct costs

Normal activity:
Support Departments Producing Departments
Human
General
Resources Factory Fabricating Assembly
$160,000 $340,000
$114,800
$95,000
nearest cent.
Human Resources
General Factory
Number of employees
Square footage
1,000
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.
60
Human Resources
80
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
21
170
5,700
Proportion of Driver Used by
General Factory
Fabricating
Assembly

Answer 1

The allocation ratios for the four departments using the direct method can be calculated as follows: Human Resources - $2,666.67 per employee, General Factory - $8.63 per square foot, Fabricating - 0, Assembly - 0.

Step-by-step explanation:

The allocation ratios for the four departments using the direct method can be calculated as follows:

1. Human Resources: The allocation ratio is the total cost of the department divided by the number of employees. So, the allocation ratio for Human Resources is $160,000 / 60 = $2,666.67 per employee.
2. General Factory: The allocation ratio is the total cost of the department divided by the square footage. So, the allocation ratio for General Factory is $114,800 / 13,300 = $8.63 per square foot.
3. Fabricating: Since there is no direct cost allocation for Fabricating, the allocation ratio is 0.
4. Assembly: Since there is no direct cost allocation for Assembly, the allocation ratio is also 0.