Reference no: EM132562174

YOUR Company operates two support departments and two production departments.

Budgeted costs and normal activity levels are as follows:

                                               Support Departments                              Production Departments

                                            W                    X                          Y                          Z

Overhead Costs                  10000            25000         45000                         60000

Cost Drivers:

Square metres (m2)               1000                1200            2000                        6000

Number of employees (NoE)         10                     15              30                           20

Direct labour hours used (DLH)   5000                                             3200

Machine hours used (MHS)          3000                                             5000

Support Department W's costs are allocated on the basis of square metres and Support Department X's costs are allocated on the basis of number of employees. Department Y uses direct labour hours to assign overhead costs to products and Department Z uses machine hours.

Question 1: Allocate the support department's overhead costs to the production departments using the Direct Method.