Chapter 7 Homework

EX.07.22

Reciprocal Method Ellers Company has to producing departments and two support departments. The following budgeted data pertain to these tour departments: Support Departments General Factory Receiving $400,000 $160,000 Producing Departments Assembly Finishing $43,000 $74,000 Direct overhead Square footage 2,700 5,400 5.400 Number of receiving orders 300 1,680 1,020 Direct labur hours 25,000 40,000 Required: 1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal method. (Round allocation ratios to two decimal places. Round allocated costs to the nearest dollar. If an amount is zero, enter "0") Allocation ratiosi General Factory Receiving Assembly Finishing Square footage 0.10 x 0.20 0.40 0.40 Number of receiving orders 0.10 0.56 x 0.56 0.347 Allocations: Receiving General Factory $ 43,000 x X Direct overhead cost Assembly Finishing 43,000 $74,000 s 169,796 169,796 137,143 83,265 General Factory Receiving Total $ 349,939 X $ 349,939 X 349,939 s 327,061 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.) Overhead Rate Assembly 13.99 X per direct labor hour 13.99 x per direct labor hour Finishing $