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 Power General Factory Operating Divisions Pottery Retail $98,000 $56,000 Overhead costs $150,000 $160,000 2,000 Machine hours 1,000 6,900 3,100 2,000 Square footage 1,700 6,000 4,000 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 0.40 0.60 Proportion of square footage 2. Allocate the support service costs using the sequential method. The support departments are ranked in order of highest cost to lowest cost. If an amount is zero, enter"0 Allocation Ratios Power General Factory Pottery Retail Machine hours Square footage Cost Allocations Power General Factory Pottery Retail Direct costs General Factory Power Cost after allocation 3. Allocate the support service costs using the reciprocal method. If an amount is zero, enter "o". Allocation Ratios Power General Factory Pottery Retail Machine hours Square footage Cost Allocations Pottery Retall General Factory Power Direct costs Cost after allocation Feuch My W 1. All three methods allocate all support department costs to the producing departments. The direct method allocates from support to producing departments. No reciprocity is recognized 2. Cost allocations are performed in step-down fashion, following a predetermined ranking procedure. Starting with the top ranking department all costs are allocated to the other support and producing departments but never back to any departments above it 3. The reciprocal method takes full account of support department reciprocity