Carica Company is a manufacturer with two production departments Machining and
Assembly as well as two support departments Materials Requisitions and Utility Services
For the last quarter of Caricas cost records indicate the following:
SUPPORT
PRODUCTION
tabletableMaterialsRequisitionsMRtableUtilityServicesUSMachining,Assembly,TotaltableBudgetedoverhead costsbefore any interdepartment costallocations$$$$$
Required:
Allocate the two support departments costs to the two operating departments using the
following methods:
a Direct method
b Stepdown method allocate MR first
c Stepdown method allocate US first
d The Algebraic method.
Compare and explain differences in the supportdepartment costs allocated to each
production department.
What approaches might be used to decide the sequence in which to allocate support
departments when using the stepdown method?
