Question

Bower Company manufactures a product in a factory that has two producing departments, Cutting and Stitching, and two support departments, D1 and D2. The activity driver for D1 is number of employees, and the activity driver for D2 is number of machine hours. The following data pertain to Bower:

	Support Departments			Producing Departments
	D1	D2		Cutting	Stitching
Direct costs	$210,000	$165,000		$130,000	$78,500
Normal activity:
Number of employees	-	40		80	170
Machine hours	800	-		15,000	5,000

Required:

A. Calculate the cost assignment ratios to be used under the direct method for departments D1 and D2. Round your answers to two decimal places.

	D1	D2
Cutting
Stitching

B. Allocate the support department costs to the producing departments by using the direct method. If an amount box does not require an entry, leave it blank or enter "0". Enter all amounts as positive numbers.

	Support Departments						Producing Departments
	D1			D2			Cutting			Stitching
Direct costs	$210,000			$165,000			$130,000			$78,500
Allocate D1
Allocate D2
Total	$			$			$			$

Answer 1