Question

Support Department Cost Allocation—Direct Method Charlie’s Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 46,400 square feet and holds assets valued at about $60,000. The Cutting Department spans about 33,600 square feet and holds assets valued at about $140,000. Charlie’s Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value. a. Determine the percentage of Janitorial costs that should be allocated to the Assembly Department. fill in the blank 1 % b. Determine the percentage of Security costs that should be allocated to the Cutting Department. fill in the blank 2 %

Answer 1

Charlie's Wood Works

a. The percentage of Janitorial costs that should be allocated to the Assembly Department is:

= 58%

The percentage of Security costs that should be allocated to the Cutting Department is:

= 70%

Step-by-step explanation:

a) Data and Calculations:

Departments Cutting Assembly Total

Square feet 33,600 46,400 80,000

Percentage based on

square feet 42% 58% 100%

Assets $140,000 $60,000 $200,000

Percentage based on

assets 70% 30% 100%

Bases for the allocation of service departments costs:

Janitorial department = Square feet

Security department = asset value