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eBook Support Department Cost Allocation-Direct Method Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance
eBook Support Department Cost Allocation-Direct Method Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 21 and 49 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows: Maintenance Department Janitorial Department Cutting Department Pruning Department $8,000 4,000 54,000 13,000 Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production departments. Production departments total costs Feedback Cutting Department Pruning Department Check My Work The direct method allocates all support department costs directly to production departments. The usage of the support department cost drivers by each department must be determined. Under the direct method, any inter-support- department usages are ignored. The percentage usage of support department cost drivers by the production departments is determined. The support department costs are allocated to the production departments by multiplying the percentage usage of each production department by the total support department costs.
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