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Anders Company has two producing departments - Cutting and Sewing - and two support departments - Maintenance and General Factory (GF). Anders provided the following
Anders Company has two producing departments - Cutting and Sewing - and two support departments - Maintenance and General Factory (GF). Anders provided the following information on the four departments: Direct overhead costs Machine hours Square footage Maintenance $10,000 459 2,500 General Factory $270,000 2,000 3,418 Cutting $56,400 9,000 5,000 Sewing $75,000 9,000 8,500 The company does not break overhead into fixed and variable components. The bases for allocation are maintenance - machine hours: general factory - square feet. 1. Calculate the allocation ratios for the four departments using the sequential (step) method. The support departments are ranked in order of highest cost to lowest cost. Take allocation ratios out to four significant digits. Maintenance General Factory Cutting Sewing Machine hours Square footage 2. Allocate the overhead costs to the producing departments using the sequential (step) method. Round allocated costs to the nearest dollar. Maintenance General Factory Cutting Sewing Direct overhead costs $10,000 $270,000 $56,400 $75,000 Machine hours Square footage Total
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