Sequential (Step) Method of Support Department Cost Allocation Chekov Company has to support departments, Human Resources and General Factory, and to producing departments, Fabricating and Assembly. Direct costs Normal activity Number of employees Square footage Support Departments Human Resources Direct costs $150,000 Allocate Human Resources 0✔ General Factory Human Resources Total after allocation s 1.500 6,000 14.000 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 the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Human Resources Required: 1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Producing Departments General Factory Fabricating Assembly $360,000 $66.000 60 150,000 ✓ 0✔ $120.900 General Factory Human Resources 0✔ General Factory o ✓ 2. Using the sequential method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter"0". Round your answers to the nearest dollar. Support Departments Producing Departments 45 General Factory 360,000✔ 80 Fabricating 0.36 ✔ Fabricating Assembly 0.64 ✔ 120,900✔ Assembly 86,000✔
Sequential (Step) Method of Support Department Cost Allocation Chekov Company has to support departments, Human Resources and General Factory, and to producing departments, Fabricating and Assembly. Direct costs Normal activity Number of employees Square footage Support Departments Human Resources Direct costs $150,000 Allocate Human Resources 0✔ General Factory Human Resources Total after allocation s 1.500 6,000 14.000 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 the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Human Resources Required: 1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Producing Departments General Factory Fabricating Assembly $360,000 $66.000 60 150,000 ✓ 0✔ $120.900 General Factory Human Resources 0✔ General Factory o ✓ 2. Using the sequential method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter"0". Round your answers to the nearest dollar. Support Departments Producing Departments 45 General Factory 360,000✔ 80 Fabricating 0.36 ✔ Fabricating Assembly 0.64 ✔ 120,900✔ Assembly 86,000✔
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sequential (Step) Method of Support Department Cost Allocation
Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.
Direct costs
Normal activity:
Number of employees
Square footage
Required:
Human Resources
General Factory
Direct costs
Support Departments
Human
Resources
$150,000
Allocate:
1,500
General Factory
Human Resources
Total after allocation
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 the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are
ranked in order of highest cost to lowest cost.
Human Resources
0✔
1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations.
Proportion of Driver Used by
Fabricating
General
Factory
$360,000
Human Resources
60
150,000 ✓
0 V
Producing Departments
Fabricating Assembly
$66.000
General Factory
0 ✓
0 ✓
$120,900
2. Using the sequential method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter"0". Round your answers to the nearest dollar.
Support Departments
Producing Departments
General Factory
45
6,000
360,000 ✓
80
14,000
0.36 ✔
Fabricating
Assembly
0.64 ✔
120,900 ✔
Assembly
86,000 ✓
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