FIX THE INCORRECT
Reciprocal Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly Support Departments Producing Departments Human General Factory Resources Assembly Fabricating $114,800 Direct costs $140,000 $350,000 $94.000 Normativity: Number of employees 60 80 170 Square footage 1.000 5,700 13,300 The costs of the Human Resources Department are located on the basis of number of employees, and the costs or General Factory are alccated on the basis of square footage Now assume that Valron Company uses the reciprocal method to allocate support department costs. Required: 1. Calculate the allocation ratics (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter 'O'. Use the rounded values for subsequent calculations. Proportion of Driver Used by Human Resources General Factory Fabricating Assembly Human Resort a 0.1935 0.2581 0.5484 General Factory 0.05 0 0.285 0.6657 2. Develop a simultaneous uation system of total coils for the support departments. If required, round your ass to four decimal places. Use these numbers for saquent cakulations. It required, round all other intermediate calculation to six decimal places, stapt the answers computed in requirement1 0.05 Human Reus () (HR) 140,000 (GF 0.1935 General Factory (6) 350,000 (HR) Salve for the total reciprocated costs of each support department (Round reciprocated total costs to the nearest dolar) Human Resources HR 159,039 General l'actory (G) 380,784 X 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, entero". Note: There may be a "sl" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct 140,000 $ 350.000 114,300 94,000 Allocate: Human Resources 159,039 30,782 X X 41,042 X 87,215 x General Factory 19,039 380,784 X 108,523 x 253,221 x Tntal wit allowtion o -2 X 264,365 x 434,436 Direct Method and Overhead Rates Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support departments support the production departments: Power, General Factory, and Purchasing. Budgeted data on the five departments are as follows: Support Departments Producing Departments General Liquid Fertilizer Power Factory Purchasing Pesticide Overhead $80,000 $312,000 $165,000 $78,800 $107,400 Square feet 1,500 1,500 4,200 4,800 Machine hours 1,403 1,345 24,000 8,000 Purchase orders 20 40 7 120 60 The company does not break overhead into fixed and variable components. The bases for allocation are power-machine hours; general factory-square feet; and purchasing-purchase orders. Required: 1. Allocate the overhead costs to the producing departments using the direct method. If required, round your allocation ratios to four decimal places and round allocated costs to the nearest dollar and use the rounded values for the subsequent calculations. Cost assignment: Pesticide Liquid Fertilizer Direct costs 78,800 $ 107,400 Power 60,000 20,000 General Factory 145,600 x 166,400 x Purchasing 110,000 X 55,000 X Total 394,400 x $ 348,800 x 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Departmental overhead rates Pesticide 13.15 X per machine hour Liquid Fertilizer $ 30.175 X per machine hour Sequential Method Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support departments support the production departments: Power, General Factory, and Purchasing, Budgeted data on the five departments are as follows: Support Departments Producing Departments General Factory $312,000 Liquid Fertilizer Power Pesticide Purchasing $165,000 Overhead $80,000 $107,700 $ $79,500 4,200 Square feet 1,500 1,500 4,800 Machine hours 1,403 1,345 24,000 9,000 Purchase orders 20 40 129 50 The company does not break overhead into lixed and variable components. The bases for allocation are power-machine hours; general ectory-square feet; and purchasing-purchase orders The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. Carry out allocation ratios to four decimal places. Use these numbers for subsequent calculations. Round allocated costs to the nearest dollar. T an amount is zero, enter 'o', Allocation ratios: Power General Factory Pesticide Liquid Fertilizer Purchasing 0.125 Square feet 0.125 0.35 0.4 Machine hours 0.75 0.25 Purchase orders 0.1 0.6 0.3 Cost allocation: Power General Factory Purchasing Pesticide Liquid Fertilizer Direct costs s 90,000 X 312,000 165,000 78,500 107,700 312,000 7 39,000 109, 2007 124,800 General Factory Purchasing 39,000 20,400 149,000 X 204,000 122,400 61,200 Power 112,050 X 37,350 X Total $ 422,150 X 331,050 X 2. Using machine hours, compute departmental overhead rates (Round the overhead rates to the nearest sent.) Overhead Rates Pestidde 17.59 X per machine hour 41.4 X per machine hour Liquid Fertilizar Reciprocal Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly Support Departments Producing Departments Human General Factory Resources Assembly Fabricating $114,800 Direct costs $140,000 $350,000 $94.000 Normativity: Number of employees 60 80 170 Square footage 1.000 5,700 13,300 The costs of the Human Resources Department are located on the basis of number of employees, and the costs or General Factory are alccated on the basis of square footage Now assume that Valron Company uses the reciprocal method to allocate support department costs. Required: 1. Calculate the allocation ratics (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter 'O'. Use the rounded values for subsequent calculations. Proportion of Driver Used by Human Resources General Factory Fabricating Assembly Human Resort a 0.1935 0.2581 0.5484 General Factory 0.05 0 0.285 0.6657 2. Develop a simultaneous uation system of total coils for the support departments. If required, round your ass to four decimal places. Use these numbers for saquent cakulations. It required, round all other intermediate calculation to six decimal places, stapt the answers computed in requirement1 0.05 Human Reus () (HR) 140,000 (GF 0.1935 General Factory (6) 350,000 (HR) Salve for the total reciprocated costs of each support department (Round reciprocated total costs to the nearest dolar) Human Resources HR 159,039 General l'actory (G) 380,784 X 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, entero". Note: There may be a "sl" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct 140,000 $ 350.000 114,300 94,000 Allocate: Human Resources 159,039 30,782 X X 41,042 X 87,215 x General Factory 19,039 380,784 X 108,523 x 253,221 x Tntal wit allowtion o -2 X 264,365 x 434,436 Direct Method and Overhead Rates Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support departments support the production departments: Power, General Factory, and Purchasing. Budgeted data on the five departments are as follows: Support Departments Producing Departments General Liquid Fertilizer Power Factory Purchasing Pesticide Overhead $80,000 $312,000 $165,000 $78,800 $107,400 Square feet 1,500 1,500 4,200 4,800 Machine hours 1,403 1,345 24,000 8,000 Purchase orders 20 40 7 120 60 The company does not break overhead into fixed and variable components. The bases for allocation are power-machine hours; general factory-square feet; and purchasing-purchase orders. Required: 1. Allocate the overhead costs to the producing departments using the direct method. If required, round your allocation ratios to four decimal places and round allocated costs to the nearest dollar and use the rounded values for the subsequent calculations. Cost assignment: Pesticide Liquid Fertilizer Direct costs 78,800 $ 107,400 Power 60,000 20,000 General Factory 145,600 x 166,400 x Purchasing 110,000 X 55,000 X Total 394,400 x $ 348,800 x 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Departmental overhead rates Pesticide 13.15 X per machine hour Liquid Fertilizer $ 30.175 X per machine hour Sequential Method Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support departments support the production departments: Power, General Factory, and Purchasing, Budgeted data on the five departments are as follows: Support Departments Producing Departments General Factory $312,000 Liquid Fertilizer Power Pesticide Purchasing $165,000 Overhead $80,000 $107,700 $ $79,500 4,200 Square feet 1,500 1,500 4,800 Machine hours 1,403 1,345 24,000 9,000 Purchase orders 20 40 129 50 The company does not break overhead into lixed and variable components. The bases for allocation are power-machine hours; general ectory-square feet; and purchasing-purchase orders The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. Carry out allocation ratios to four decimal places. Use these numbers for subsequent calculations. Round allocated costs to the nearest dollar. T an amount is zero, enter 'o', Allocation ratios: Power General Factory Pesticide Liquid Fertilizer Purchasing 0.125 Square feet 0.125 0.35 0.4 Machine hours 0.75 0.25 Purchase orders 0.1 0.6 0.3 Cost allocation: Power General Factory Purchasing Pesticide Liquid Fertilizer Direct costs s 90,000 X 312,000 165,000 78,500 107,700 312,000 7 39,000 109, 2007 124,800 General Factory Purchasing 39,000 20,400 149,000 X 204,000 122,400 61,200 Power 112,050 X 37,350 X Total $ 422,150 X 331,050 X 2. Using machine hours, compute departmental overhead rates (Round the overhead rates to the nearest sent.) Overhead Rates Pestidde 17.59 X per machine hour 41.4 X per machine hour Liquid Fertilizar
