Sequential Method Eilers Company has two producing departments and two support d
ID: 2520937 • Letter: S
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 $400,000 $160,000 $43,000 $74,000 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
Answer 1. Allocation Ratios: Receiving Assembly Finishing Square Footage 0.2000 0.4000 0.4000 No. of Receiving Orders - 0.6222 0.3778 Support Department Cost Allocation Statement Under Step Down Method Support Producing General Factory Receiving Assembly Finishing Direct Overhead Cost 720,000 1,428,000 6,000,000 4,800,000 Allocate: General Factory (720,000) 144,000 288,000 288,000 Receiving - (1,572,000) 978,133 593,867 Total - - 7,266,133 5,681,867 Answer 2. Assembly Finishing Total Overhead Cost 7,266,133 5,681,867 Direct Labor Hours 25,000 40,000 Departmental Overhead rate (Per DLH) 290.65 142.05
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