Sequential Method
Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:
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 |
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:
Receiving | Assembly | Finishing | |
Square footage | |||
Number of receiving orders |
Allocations:
General Factory | Receiving | Assembly | Finishing | |
Direct overhead cost | $ | $ | $ | $ |
Allocate: | ||||
General Factory | ||||
Receiving | ||||
Total | $ | $ | $ | $ |
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Overhead Rate | |
Assembly | per direct labor hour |
Finishing | per direct labor hour |
1) Allocation ratios:
Receiving | Assembly | Finishing | |
Square footage | (2700/13500)= 0.20 | (5400/13500)= 0.40 | (5400/13500)= 0.40 |
Number of receiving orders | 0 | (1680/2700)= 0.62 | (1020/2700)= 0.38 |
Total number of square footage= 2700+5400+5400= 13500
Total number of receiving orders= 1680+1020= 2700
Allocations:
General Factory | Receiving | Assembly | Finishing | |
Direct overhead cost | $400000 | $160000 | $43000 | $74000 |
Allocate: | ||||
General Factory | (400000) | (400000*0.20)= 80000 | (400000*0.40)= 160000 | (400000*0.40)= 160000 |
Receiving | - | (240000) | (240000*0.62)= 148800 | (240000*0.38)= 91200 |
Total | $0 | $0 | $351800 | $325200 |
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Overhead Rate | |
Assembly | (351800/25000)= $14.07 per direct labor hour |
Finishing | (325200/40000)= $8.13 per direct labor hour |
Sequential Method Eilers Company has two producing departments and two support departments. The following budgeted data...
Sequential Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: 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 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...
Direct Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Producing Departments Support Departments General Factory Receiving Finishing Assembly $43,000 Direct overhead $400,000 $160,000 $74,000 5,400 Square footage Number of receiving orders 2,700 - 5,400 1,680 1,020 Direct labor hours - 25,000 40,000 The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the...
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. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $170,000 $330,000 $114,600 $91,000 Normal activity: Number of employees — 50 70 160 Square footage 1,100 — 5,900 13,000 Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of...
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. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $160,000 $340,000 $114,600 $93,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are...
Chapter 7 Allocating Costs of S wart Departments and Joint Products Exercise 7.22 Reciprocal Method alers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: OBJECTIVE Support Departments General Factory Receiving S400,000 $160,000 Direct overhead Square footage Number of receiving orders Direct labor hours Producing Departments Assembly Finishing S43,000 $74,000 5.400 5,400 1,680 1,020 25,000 40.000 2,700 300 Required: Allocate the overhead costs of the support departments to the producing departments...
Use the following data to prepare a model that allocates the support departments using the three methods (direct, sequential, and reciprocal). Instructions: You should design your model to include an input section, an output section, and user instructions. The output section should have nothing but references and formulas in it. For the sequential method, allocate the support department with the highest cost first. For the reciprocal method, either calculate the reciprocal amounts using a formula in Excel or use iterative...
Direct Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $160,000 $340,000 $114,600 $93,000 Normal activity: Number of employees 60 80 120 170 Square footage 1,000 5,700 13,300 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...
Direct Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $160,000 $340,000 $114,600 $93,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated...
Direct Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $160,000 $340,000 $114,600 $93,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated...
Direct Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $150,000 $330,000 $114,200 $94,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated...