Question

# Anders Company has two producing departments - Cutting and Sewing - and two support departments -...

Anders Company has two producing departments - Cutting and Sewing - and two support departments - Maintenance and General Factory (GF). Anders provided the following information on the four departments:

 Maintenance General Factory Cutting Sewing Direct overhead costs \$10,000 \$270,000 \$56,400 \$75,000 Machine hours 459 2,000 9,000 9,000 Square footage 2,500 3,418 5,000 8,500

The company does not break overhead into fixed and variable components. The bases for allocation are maintenance - machine hours; general factory - square feet.

1. Calculate the allocation ratios for the four departments using the direct method. The support departments are ranked in order of highest cost to lowest cost. Take allocation ratios out to four significant digits.

 Maintenance General Factory Cutting Sewing Machine hours Square footage

2. Allocate the overhead costs to the producing departments using the direct method. Round allocated costs to the nearest dollar.

 Maintenance General Factory Cutting Sewing Direct overhead costs \$10,000 \$270,000 \$56,400 \$75,000 Machine hours Square footage Total

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