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Category > Accounting Posted 19 Aug 2017 My Price 9.00

Stevenson Company

Exercise 5-44 (Appendix 5B) Direct Method of Support Department Cost Allocation Stevenson Company is divided into two operating divisions: Battery and Small Motors. The company allocates power and general factory costs to each operating division using the direct

method.  Power costs  are allocated on  the basis of the  number  of machine hours  and    general

 

 

 

 

 

                                                                                                                             

factory costs on the basis of square footage. Support department cost allocations using the direct method are based on the following data:

Support  Departments            Operating Divisions

 

General

Small

 

 

Power

Factory

Battery

Motors

 

Overhead costs

$160,000

$430,000

$163,000

$84,600

 

Machine hours

2,000

2,000

7,000

1,000

 

Square footage

1,000

1,500

5,000

15,000

 

Direct labor hours

 

 

18,000

60,000

Required:

 

 

 

 

 

1.       Calculate the allocation ratios for Power and General Factory. (Note: Carry these calcula- tions out to four decimal places.)

2.        Allocate the support service costs to the operating divisions. (Note: Round all amounts to the nearest dollar.)

3.       Assume divisional overhead rates are based on direct labor hours. Calculate the overhead rate for the Battery Division and for the Small Motors Division. (Note: Round overhead rates to the nearest cent.)

Answers

Maurice Tutor
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Status NEW Posted 19 Aug 2017 02:08 PM My Price 9.00

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