Reference no: EM132839374

Question - NAG Manufacturing Company has two support departments - Human Resources and Facilities Management, and two production departments - cutting and assembly. The distribution of each support department's efforts to the other departments is shown below:

FROM TO

H.R Facilities Cutting Assembly

H.R 0% 45% 25% 30%

Facilities 30% 0% 30% 40%

The direct operating costs of the departments (including both variable and fixed costs) were as follows:

Labour Overhead

H.R $124,640 $115,360

Facilities Management 227,380 222,620

Cutting 749,430 450,570

Assembly 99,160 125,840

Required -

1. Calculate total production department costs using the direct method.

2. Calculate total production department costs using the step method with the Human Resources department going first. How is this method different from the direct method.

3. Calculate total production department costs using the reciprocal method. How is this method different from the step down method.