ilers 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 $79,000 Square footage — 2,200 4,400 4,400 Number of receiving orders 380 — 1,800 1,350 Direct labor hours — — 20,000 47,000 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 all
ilers 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 $79,000 Square footage — 2,200 4,400 4,400 Number of receiving orders 380 — 1,800 1,350 Direct labor hours — — 20,000 47,000 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 all
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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 |
$500,000 | $170,000 | $42,000 | $79,000 |
| Square footage | — | 2,200 | 4,400 | 4,400 |
| Number of receiving orders | 380 | — | 1,800 | 1,350 |
| Direct labor hours | — | — | 20,000 | 47,000 |
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 | fill in the blank 1 | fill in the blank 2 |
| Number of receiving orders | fill in the blank 3 | fill in the blank 4 |
| Allocations: | ||
| Assembly | Finishing | |
| General Factory | $fill in the blank 5 | $fill in the blank 6 |
| Receiving | fill in the blank 7 | fill in the blank 8 |
| Direct costs | fill in the blank 9 | fill in the blank 10 |
| Total | $fill in the blank 11 | $fill in the blank 12 |
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
| Overhead Rate | |
| Assembly | fill in the blank 13 per direct labor hour |
| Finishing | fill in the blank 14 per direct labor hour |
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