Dexter Company is divided into two operating divisions: battery and small motors. The company allocates power and human resources cost to each operating division using the direct method. Power costs are allocated on the basis of the number of machine-hours, and human resources cost on the basis of the number of employees. Support department cost allocations using the direct method are based on the following data:

Now assume that Dexter Company uses the sequential method to allocate support department costs to the producing departments. Human resources is allocated first in the sequential method for Dexter.

Operating Divisions Small Motors Support Departments Power Human Resources $150,000 $365,000 2,500 2,500 45 Battery $290,000 7,500 Overhead costs Machine hours Number of employees Direct labour hours $127,500 4,500 75 115,000 35 25 25,000 Required: 1. Calculate the allocation ratios for power and human resources. (Carry these calculations out to three significant digits.) Allocate the support service costs to the producing departments. 3. Assume departmental overhead rates are based on direct labour hours. Calculate the over- head rate for the battery division and for the small motors division (round overhead rates to the nearest cent). 4. CONCEPTUAL CONNECTION What is the difference between the direct method and the sequential method of allocating support centre costs? Which is better