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Direct Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Direct overhead Square
Direct Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Direct overhead Square footage Number of receiving orders Direct labor hours Support Departments Producing Departments General Factory Receiving Assembly Finishing $480,000 $140,000 $47,000 $77,000 - 2,800 5,600 5,600 390 2,000 21,000 1,050 48,000 The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. Allocation ratios: Square footage Number of receiving orders Allocations: Assembly Finishing
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