In: Accounting
Allocation of support departments |
S1 |
S2 |
P1 |
P2 |
|
S1 |
- |
10% |
40% |
50% |
|
S2 |
20% |
- |
50% |
30% |
|
Direct costs |
£4,500 |
£8,000 |
£10,000 |
£15,000 |
Required:
a. |
Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. |
b. |
Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. |
1.
a | |||||
schedule allocating the support department costs to the producing departments using the direct allocation method. | |||||
Support Department | Production Dept | ||||
Ratio Of allocation | S1 | S2 | S1 | S2 | |
Primary distribution | $ 4,500 | $ 8,000 | $ 10,000 | $ 15,000 | |
Distribution S1 | 04:05 | $ -4,500 | $ 2,000 | $ 2,500 | |
Distribution S2 | 05:03 | $ -8,000 | $ 5,000 | $ 3,000 | |
Total | $ - | $ - | $ 17,000 | $ 20,500 |
b | |||||
schedule allocating the support department costs to the producing departments using the sequential allocation method | |||||
Support Department | Production Dept | ||||
Ratio Of allocation | S1 | S2 | S1 | S2 | |
Primary distribution | $ 4,500 | $ 8,000 | $ 10,000 | $ 15,000 | |
Distribution S2 | 02:05:03 | $ 1,600 | $ -8,000 | $ 4,000 | $ 2,400 |
Distribution S1 | 04:05 | $ -6,100 | $ 3,389 | $ 2,711 | |
Total | $ - | $ - | $ 17,389 | $ 20,111 |
2. Production department are direct actual cost related to production of the product whereas support departments
are departmental indirect cost(not actual) which were incur to support the main production activity .
Examples of production departments: manufacturing department, raw material procument,processing of finished good
Examples of Support departments: Management ,accounting ,marketing,sales promotion