Exercise 7.24 Sequential Method Eilers Company has two producing departments and

Question

Exercise 7.24
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.)

Receiving Assembly Finishing Square footage Number of receiving orders

Explanation / Answer

Allocation ratios:

Receiving

Assembly

Finishing

Square footage

20%

40%

40%

Number of receiving orders

-

56%

34%

Allocations:

      General Factory

Receiving

Assembly

Finishing

Direct overhead cost

$400000

$160000

$43000

$74000

Allocate:

  General Factory

($400000)

$80000

$160000

$160000

  Receiving

($80000)

$44800

$27200

Total

$0

$ 0

$ 204800

$ 187200

2. Using direct labor hours, departmental overhead rates are

Overhead Rate

Assembly

1.72 per direct labor hour

Finishing

1.85 per direct labor hour

Receiving

Assembly

Finishing

Square footage

20%

40%

40%

Number of receiving orders

-

56%

34%

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