Refer to Cornerstone Exercise 5-6 for data. Now assume that the Pineapple Pen Company uses the sequential
Question:
Refer to Cornerstone Exercise 5-6 for data. Now assume that the Pineapple Pen Company uses the sequential method to allocate support department costs to the producing departments. Maintenance is allocated first in the sequential method for the company.
Required:
1. Calculate the allocation ratios for the cafeteria and the maintenance departments (Carry these calculations out to four significant digits.)
2. Allocate the support service costs to the producing departments.
3. Assume departmental overhead rates are based on direct labour hours. Calculate the overhead rate for the pen division and for the pencil division (round overhead rates to the nearest cent).
4. What is the difference between the direct method and the sequential method of allocating support centre costs? Which is better?
Step by Step Answer:
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman