Calculate allocation ratios for power and general factory

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Question - Stevenson Company is divided into two operating divisions: Battery and Small Motors. The company allocates power and general factory costs to each operating division using the sequential method. General Factory is allocated first in the sequential method for the company. Support department cost allocations using the sequential method are based on the following data:

 

Support Departments

Operating Divisions

 

Power

General Factory

Battery

Small Motors

Overhead costs

$160,000

$430,000

$163,000

$84,600

Machine hours

2,000

2,000

8,500

3,000

Square footage

1,000

1,500

10,000

15,000

Direct labor hours



18,000

60,000

Required -

1. Calculate the allocation ratios for Power and General Factory.

2. Allocate the support service costs to the operating divisions. Round all amounts to the nearest dollar.

3. Assume divisional overhead rates are based on direct labor hours. Calculate the overhead rate for the Battery Division and for the Small Motors Division.

Reference no: EM133171427

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