Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these

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 $460,000 $140,000 $48,000 $73,000
Square footage 2,000 4,000 4,000
Number of receiving orders 350 1,600 1,500
Direct labor hours 23,000 44,000

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 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 Assemblyy Finishing per direct labor hour per direct labor hour

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 Assemblyy Finishing per direct labor hour per direct labor hour

Expert Answer

 

1 Assembly finishing
Allocation ratios
Square footage 1 1
number of receiving orders 0.5161 0.4839
Allocations
Assembly finishing
General factory 230000 230,000
Receiving 72258 67742
direct costs 48,000 73,000
total 350258 370,742
2) overhead rate
Assemblry 15.23
finishing 8.43
(overhead rate = total overhead / direct labor )
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