Asked by Keyla Ortiz on Apr 28, 2024
Verified
Departmental information for the four departments at Samoa Industries is provided below. The Janitorial and Cafeteria departments are support departments. Determine the dollar amount of the Cafeteria Department costs to be allocated to the (a) Cutting and (b) Assembly departments using the direct method.
Direct Method
An approach to preparing the cash flow statement where actual cash flows from operating activities are listed.
Support Departments
Units within an organization that provide services or support to the operational departments, but do not directly contribute to the production of goods or services.
Cafeteria Department Costs
The expenses associated with operating a cafeteria within an organization, including food supplies, labor, and equipment.
- Evaluate the approaches for distributing support department costs employing direct, reciprocal, and stepwise techniques.
Verified Answer
75% × $50,000 = $37,500
b. 40 ÷ (120 + 40) = 25%
25% × $50,000 = $12,500
Learning Objectives
- Evaluate the approaches for distributing support department costs employing direct, reciprocal, and stepwise techniques.
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