Sequential (Step) Method of Support Department Cost Allocation Valron Company ha

Question

Sequential (Step) Method of Support Department Cost Allocation

Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.

The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost.

Required:

1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations.

2. Using the sequential method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter"0".

Proportion of Driver Used by Human Resources General Factory Fabricating Assembly Human Resources General Factory

Explanation / Answer

1.

2.

Proportion of Driver Used by Human Resources General Factory Fabricating Assembly Human Resources 32% (80/250) 68% (170/250) General Factory 5% (1,000/20,000) 28.5% (5,700/20,000) 66.5% (13,300/20,000)

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