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Use the Step (Sequential) Method to solve the following: Dodson Company uses a job-order costing system to compute product costs. There are two producing departments
Use the Step (Sequential) Method to solve the following:
Dodson Company uses a job-order costing system to compute product costs. There are two producing departments (P1 and P2) and two support departments (S1 and S2). The costs incurred in support departments S1 and S2 are allocated to producing departments P1 and P2 and included in their factory overhead rates for costing jobs. S1 costs are allocated based on the number of employees while S2 costs are allocated based on direct labor hours. The production departments overhead rates are also computed based on direct labor hours. The data below are available for February 2018: S1 S2 P1 P2 $1,200,000$1,800,000$7,000,000$11,750,000 Direct department costs Number of emplovees Direct labor hours 13 325 48 2,250 72 1,800 450 Required: 1. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The department with the greatest percentage of interdepartmental services should be allocated first (15 points) 2. Determine the departmental rates per direct labor hour for P1 and P2 (round to the closest whole number): 10 points 3. Job A2 was ordered and completed during February at a prime cost of S2,600,000. In addition, this job required 250 direct labor hours in Department P1 and 100 direct labor hours in Department P2. What was the total cost of Job A2? 15 points 4. Assume that the company's policy is to price a job at 150% of cost, compute the bid price of Job A2 to be proposed to the customer (10 points)Step by Step Solution
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