Question

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 $500,000 $170,000 $42,000 $75,000
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:

General Factory 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

Homework Answers

Answer #1

1). Calculation is as follows:-

2). Calculation of departmental overhead rates usind direct labor hours.
Assembly = $42,000 / 25,000 hours = $1.68 per labor hour
Finishing = $75,000 / 40,000 hours = $1.88 per labor hour

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