(Appendix 4B) Assigning Support Department Costs by Using the Direct Method

Sanjay Company manufactures a product in a factory that has two producing departments, Assembly and Painting, and two support departments, S1 and S2. The activity driver for S1 is square footage, and the activity driver for S2 is number of machine hours. The following data pertain to Sanjay:

	Support Departments			Producing Departments
	S1	S2		Assembly	Painting
Direct costs	$200,000	$140,000		$115,000	$96,000
Normal activity:
Square footage		500		1,875	625
Machine hours	337			3,200	12,800

Required:

1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratiosone for Assembly and the other for Painting.) Round your answers to two decimal places.

	Assembly	Painting
S1	fill in the blank 1	fill in the blank 2
S2	fill in the blank 3	fill in the blank 4

2. Allocate the support department costs to the producing departments by using the direct method. Use a minus sign to indicate a subtraction. For those boxes in which no entry is required, leave the box blank or enter zero ("0").

	Support Departments				Producing Departments
Allocate:	S1		S2		Assembly		Painting
Direct costs	$fill in the blank 5		$fill in the blank 6		$fill in the blank 7		$fill in the blank 8
S1	fill in the blank 9		fill in the blank 10		fill in the blank 11		fill in the blank 12
S2	fill in the blank 13		fill in the blank 14		fill in the blank 15		fill in the blank 16
Total	$fill in the blank 17		$fill in the blank 18		$fill in the blank 19		$fill in the blank 20