SHOW NEW PR 19-13 Support department cost allocation
Obj. 3
Hooligan Adventure Supply produces and sells various outdoor equipment. The Molding and
Assembly production departments are supported by the Personnel and Maintenance departments.
Personnel costs are allocated to the production departments based on the number of employees,
and Maintenance costs are allocated based on number of service calls. Information about these
departments is detailed in the following table:
Personnel
Maintenance Molding Assembly
Department Department Department Department
Number of employees
41
49
Number of service calls
57
41
168
112
Department cost
$72,000
$69,000
(Continued)
28
10
$15,000
$11,400
988
Chapter 19 Support Department and Joint Cost Allocation
Instructions
1. Assuming that Hooligan Adventure Supply uses the sequential method to allocate its support
department COSLS, which support department does it most likely allocate first
2. Based on your response in part (1), determine the total costs allocated from each support
department to each production department using the sequential method.
if Hooligan Adventure Supply wanted to use a more accurate support department
cost allocation method, which method should it choose? What might discourage the company
from using this method