Direct Method Eilers Company has two producing departments and two support departments. The following budgeted...
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Accounting
Direct Method
Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:
| Support Departments | Producing Departments | |||
| General Factory | Receiving | Assembly | Finishing | |
| Direct overhead | $470,000 | $190,000 | $46,000 | $78,000 |
| Square footage | 2,500 | 5,000 | 5,000 | |
| Number of receiving orders | 320 | 1,700 | 1,300 | |
| Direct labor hours | 30,000 | 42,000 | ||
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
Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
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