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Support Department Cost Allocations. Riverside Furniture Company manufactures unfinished furniture for sale to retailers. Riverside has two support departments, Maintenance and Human Resources, and two operating departments, Machining and Assembly. The costs of the Maintenance Department are allocated to the operating departments based on the number of square feet and the costs of Human Resources are allocated based on the number of employees. The following data are available for the year:
Required:
1. Allocate the support department's costs to the operating departments using the direct method
2. Rank the departments based on the percentages of their services provided to other supports departments use this ranking the support department's costs to the operating departments based on the step down method.
3. Allocate the support department's costs to the operating departments using the reciprocal method.
4. Which method would you recommend? why?
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