(Appendix 4B) Sequential Method of Support Department Cost Allocation Stevenson Company is divided into two operating...

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(Appendix 4B) Sequential Method of Support Department Cost Allocation Stevenson Company is divided into two operating divisio Allocation ratios for Power Battery 0.7895 Small Motors 0.2105 2. Allocate the support service costs to the operating divisio

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Answer 1

Answer #1

1.

To calculate ratios for power and general factory:

a) To find out allocation ratios for general factory:

Square footage:
Battery + Small motors
=10000+20000=30000
Now,
Power=1000/30000=0.0333
Battery=10000/30000=0.3333
Smallmotors=20000/30000=0.6667

b) To find out allocation ratios for power:

Machine hours:Battery + Small motors=7500+2000=9500
Now,
Battery=7500/9500=0.7895
Small motors=2000/9500=0.2105

Hence,
a) Allocation ratios for general factory:

Power_0.0333
Battery_0.3333
Small motors_0.6667

b) Allocation ratios for power:

Battery_0.7895
Small motors _0.2105

3.

Overhead rates:

Battery overhead rate- 163000/18000= $9.06 per LH.

Small motors overhead rate- 84600/60000= $1.41 per LH.

For que 2 I am not sure about the correct answer.

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Answer 2

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