Exercise 7.24 Sequential Method Eilers Company has two producing departments and
ID: 2545179 • Letter: E
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:
Can someone help me with the number of receiving orders allocation ratios for Assembly and Finishing? .56 and .34 are incorrect and I cant seem to determine the proper formula to solve. Thanks
Receiving Assembly Finishing Square footage Number of receiving ordersExplanation / Answer
Receiving
Assembly
Finishing
Square footage
0.2
0.4
0.4
Number of receiving orders
0
0.6222
0.3778
General
Receiving
Assembly
Finishing
Direct Overhead
400000
160000
43000
74000
General cost allocated
-400000
80000
160000
160000
Receiving cost allocated
-240000
149328
90672
Total
0
0
352328
324672
Working:
1. Allocation for general factory:
Total square footage = 2700+5400+5400 = 13,500
Receiving allocation = 2700/13500 = 0.2
Assembly allocation = 5400/13500 = 0.4
Finishing allocation = 5400/13500 = 0.4
2. Allocation for Receiving:
No. of orders = 1680+1020 = 2700
Assembly allocation = 1680/2700 = 0.6222
Finishing allocation = 1020/2700 = 0.3778
Receiving
Assembly
Finishing
Square footage
0.2
0.4
0.4
Number of receiving orders
0
0.6222
0.3778
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