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equired: Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four gnificant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. llocation ratios:

equired: Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four gnificant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. llocation ratios:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Direct 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** | $430,000 | $170,000 | $45,000 | $76,000 | | **Square footage** | — | 2,500 | 5,000 | 5,000 | | **Number of receiving orders** | 320 | — | 1,900 | 1,200 | | **Direct labor hours** | — | — | 28,000 | 45,000 | 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 support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. **Allocation Ratios:** | | **Assembly** | **Finishing** | |-----------------------|-------------|---------------| | **Square footage** | | | | **Number of receiving orders** | | |
Transcribed Image Text:**Direct 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** | $430,000 | $170,000 | $45,000 | $76,000 | | **Square footage** | — | 2,500 | 5,000 | 5,000 | | **Number of receiving orders** | 320 | — | 1,900 | 1,200 | | **Direct labor hours** | — | — | 28,000 | 45,000 | 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 support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. **Allocation Ratios:** | | **Assembly** | **Finishing** | |-----------------------|-------------|---------------| | **Square footage** | | | | **Number of receiving orders** | | |
### Allocation Ratios #### Assembly | Finishing - **Square footage** - **Number of receiving orders** --- ### Allocations #### Assembly | Finishing - **General Factory** - $____ | $____ - **Receiving** - $____ | $____ - **Direct costs** - $____ | $____ - **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
Transcribed Image Text:### Allocation Ratios #### Assembly | Finishing - **Square footage** - **Number of receiving orders** --- ### Allocations #### Assembly | Finishing - **General Factory** - $____ | $____ - **Receiving** - $____ | $____ - **Direct costs** - $____ | $____ - **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
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