Reference no: EM131284782

Sequential (Step) 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

Resources General

Factory Fabricating Assembly

Direct costs $175,000    $400,000    $114,200    $98,000   

Normal activity:

   Number of employees —    60    80    170   

   Square footage 1,100    —    5,900    13,900   

Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost.

Required:

1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations.

Proportion of Driver Used by

Human Resources General Factory Fabricating Assembly

Human Resources

General Factory

2. Using the sequential method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter"0". Round your answers to the nearest dollar.

Support Departments Producing Departments

Human Resources General Factory Fabricating Assembly

Direct costs $ $ $ $

Allocate:

  General Factory                

  Human Resources                

Total after allocation $ $ $ $