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

Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen:

	Support Departments			Producing Departments
	S1	S2		Cutting	Sewing
Direct costs	$180,000	$150,000		$122,000	$90,500
Normal activity:
Number of employees		30		63	147
Maintenance hours	1,200			16,000	4,000

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 Cutting and the other for Sewing.) Enter your answers as decimal values.

	S1	S2
Cutting
Sewing

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		Cutting		Sewing
Direct costs	$		$		$		$
S1
S2
Total	$		$		$		$