Pott Inc. is divided into 2 operating divisions: Pottery & Retail. The company allocates Power & 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. Allocation for the coming year are based on the following data:

	Support Departments		Operating Divisions
	Power Department	General factory Department	Pottery	Retail
Direct costs	$150,000	$160,000	$98,000	$56,000
Normal Activity:
Machine Hours	-	1000	6,900	3,100
Square Footage	2000	-	4000	6,000

1. Calculate the allocation ratios for the departments using the direct method.

2. Using the direct method, allocate the cost o the Power Department and General Factory department to the Pottery and Retail departments.

3.Determine the support department to allocate first, by ranking the support departments in order of the percentage of service provided to the other support department.

4. Develop a table with the allocation ratios for the departments using the sequential (step) method showing the support department first that provides the greater service to the other support department.

5. Using the sequential method, allocate the costs of the Power Department and General Factory Department to the pottery and retain departments.