Sequential Method Eilers Company has two producing departments and two support d

Question

Sequential Method

Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:

The support departments are ranked in order of highest cost to lowest cost.

Required:

1. Allocate the costs of the support departments using the sequential method. (Use the rounded values for subsequent calculations. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. If an amount is zero, enter "0".)

Allocation ratios:

Allocations:

2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)

Support Departments Producing Departments General
Factory Receiving Assembly Finishing Direct overhead $500,000 $170,000 $45,000 $71,000 Square footage — 2,700 5,400 5,400 Number of receiving orders 300 — 1,680 1,020 Direct labor hours — — 25,000 40,000

Explanation / Answer

Solution 1:

Solution 2:

Allocation Ratios Particulars General Factory Receiving Assembly Finishing Square Footage 0.2000 0.4000 0.4000 Nos of receiving orders 0.6222 0.3778

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