Question
KneeGuard, Inc. uses the Direct Method to allocate support department costs. The Service Departments are Accounting and Custodial services. Production departments are Parts and Assembly.
KneeGuard, Inc. uses the Direct Method to allocate support department costs. The Service Departments are Accounting and Custodial services. Production departments are Parts and Assembly. Initial cost distributions to each department are as follows: Accounting = $140,000; Custodial = $720,000; Parts = $7500,000 and Assembly = $440,000.
Accounting Custodial Parts Assembly
Square feet 800 1,000 6,000 2,000
People 4 8 15 9
KneeGuard uses # people as the cost driver for Accounting and square footage for Custodial costs. What will be the percentage of Custodial costs allocated to Parts?
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