Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Support Departments Operating Divisions General Factory Pottery Retail $160,000 $98,000 $56,000 1,000 6,900 3,100 1,700 4,000 6,000 Power Overhead costs $150,000 Machine hours Square footage 2,000 2,000 Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. Required: 1. Allocate the support service costs using the direct method. Allocation Ratios Pottery Retail Proportion of machine hours 0.69 0.31 Proportion of square footage 0.4 0.60 Cost Allocations Pottery Retail Power 103,500 46,500 General Factory 64,000 96,000