Question Direct Method of Support Department Cost Allocation StevensonCompany is divided into two operating divisions: Battery and SmallMotors. The company allocates power and general factory costs toeach operating division using the direct method. Power costs areallocated on the basis of the number of machine hours and generalfactory costs on the basis of square footage. Support departmentcost allocations using the direct method are based on the followingdata: Support Departments Operating Divisions Power General FactoryBattery Small Motors Overhead costs $160,000 $430,000 $163,000$84,600 Machine hours 2,000 2,000 8,500 2,000 Square footage 1,0001,500 7,500 17,500 Direct labor hours 18,000 60,000 Required: 1.Calculate the allocation ratios for Power and General Factory.(Note: Carry these calculations out to four decimal places, ifnecessary.) Power General Factory Battery 0.75 Small Motors 0.25 2.Allocate the support service costs to the operating divisions.Round all amounts to the nearest dollar. Use a minus sign toindicate a subtraction. For those boxes in which no entry isrequired, leave the box blank or enter zero ("0"). SupportDepartments Operating Divisions Power General Factory Battery SmallMotors Direct costs $ 160,000 $ 430,000 $ 163,000 $ 84,600Allocate: Power -160,000 0 General Factory 0 -430,000 Total $ 0 $ 0$ $ 3. Assume divisional overhead rates are based on direct laborhours. Calculate the overhead rate for the Battery Division and forthe Small Motors Division. Round your answers to the nearest cent.Battery overhead rate $ Small Motors overhead rate $
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Direct Method of Support Department Cost Allocation StevensonCompany is divided into two operating divisions: Battery and SmallMotors. The company allocates power and general factory costs toeach operating division using the direct method. Power costs areallocated on the basis of the number of machine hours and generalfactory costs on the basis of square footage. Support departmentcost allocations using the direct method are based on the followingdata: Support Departments Operating Divisions Power General FactoryBattery Small Motors Overhead costs $160,000 $430,000 $163,000$84,600 Machine hours 2,000 2,000 8,500 2,000 Square footage 1,0001,500 7,500 17,500 Direct labor hours 18,000 60,000 Required: 1.Calculate the allocation ratios for Power and General Factory.(Note: Carry these calculations out to four decimal places, ifnecessary.) Power General Factory Battery 0.75 Small Motors 0.25 2.Allocate the support service costs to the operating divisions.Round all amounts to the nearest dollar. Use a minus sign toindicate a subtraction. For those boxes in which no entry isrequired, leave the box blank or enter zero ("0"). SupportDepartments Operating Divisions Power General Factory Battery SmallMotors Direct costs $ 160,000 $ 430,000 $ 163,000 $ 84,600Allocate: Power -160,000 0 General Factory 0 -430,000 Total $ 0 $ 0$ $ 3. Assume divisional overhead rates are based on direct laborhours. Calculate the overhead rate for the Battery Division and forthe Small Motors Division. Round your answers to the nearest cent.Battery overhead rate $ Small Motors overhead rate $
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