How do you allocate support costs?

Three methods can be used to allocate support department costs: the direct, sequential, and reciprocal methods. In determining which support department cost allocation method to use, companies must: ? Determine the extent of support department interaction. ? Weigh the costs and benefits associated with each method.Click to see full answer. Thereof, how do you allocate common costs? If so, a number of possible allocation methods have been used, including: Sales. Costs are apportioned based on the net sales reported by each entity. Cost allocation methods Direct labor. Overhead is applied based on the amount of direct labor consumed by a unit of production. Machine time. Square footage. Secondly, how do you allocate fixed costs to products? Divide the total in the cost pool by the total units of the basis of allocation used in the period. For example, if the fixed overhead cost pool was $100,000 and 1,000 hours of machine time were used in the period, then the fixed overhead to apply to a product for each hour of machine time used is $100. Also to know is, what are the three methods of cost allocation? There are three methods commonly used to allocate support costs: (1) the direct method; (2) the sequential (or step) method; and (3) the reciprocal method. C. Assigning Budget versus Actual Service Costs direct method. sequential method, and. reciprocal method. How service center costs are allocated using the various allocation methods?Examples of bases used to allocate service department costs are number of employees, machine-hours, direct labor-hours, square footage, and electricity usage. There are three methods for allocating service department costs: The first method, the direct method, is the simplest of the three.