BEX.07.04

Chapter 7 BEX

Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly Support Departments Producing Departments Human General Factory Fabricating Assembly Resources $150,000 $ Direct costs $360,000 $120,900 $86,000 Normal activity 60 45 80 Number of employees Square footage 1,500 6,000 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the cast of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "O". Use the rounded values for subsequent calculations. Proportion of Driver Used by General Factory Fabricating Assembly Human Resources o Human Resources o 0.36 0.64 General Factory 0.0698 0 0.2791 7 0.6512 2. Using the sequential method, allocate the posts of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter"O". Round your answers to the nearest dollar. Support Departments Producing Departments Fabricating Assembly Human Resources General Factory Direct costs $150,000 $360,000 120,000 86,000 Allocate: General Factory 25,128 -360,000 X 100,476 234,432 Human Resources -175,128 o 63,046 112,082 Total after allocation 0 $ 0 x 284,422 432,514