Production Department 1 Production Department 2 Production Department 3 Support Department 1 cost driver 1,400 100 500 Support Department 1’s costs total $142,000. Using the direct method of support department cost allocation, determine the costs from Support Department 1 that should be allocated to each production department.

Department 1 cost Allocation =$99,400

Department 2 cost Allocation=$7,100

Department 3 cost Allocation=$35,500

Explanation:

Calculation for determining the costs from Support Department 1 that should be allocated to each production department using the direct method of support department cost allocation,

The first step is to find the Support department total cost drivers

Using this formula

Support department total cost drivers = Production Department 1 + Production Department 2 + Production Department 3

Let plug in the formula

Support department total cost drivers= 1,400+100+500

Support department total cost drivers = 2,000

Second step is to determine the costs from Support Department 1 that should be allocated to each production department.

Production Department 1

Support Department 1 Allocation

142,000* 1,400/2,000= $99,400

Production Department 2

Support Department 1 Allocation

142,000* 100/2,000= $7,100

Production Department 3

Support Department 1 Allocation

142,000* 500/2,000= $35,500

Therefore the costs from Support Department 1 that should be allocated to each production department will be :

Department 1 cost Allocation =$99,400

Department 2 cost Allocation=$7,100

Department 3 cost Allocation=$35,500

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