Sequential allocation Carleton Company has two service departments and two production departments. Information on annual manufacturing overhead costs and cost drivers follows:
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SERVICE DEPARTMENTS
PRODUCTION DEPARTMENTS
ITEM
S1
S2
P1
P2
Overhead costs
$65,000
$55,000
$160,000
$240,000
Direct labor hours
2,000
1,500
3,000
Number of square feet
800
1,200
2,400
2,600
The company allocates service department costs using the sequential method. First, S1 costs are allocated on the basis of direct labor hours. Next, S2 costs are allocated on the basis of square footage. The square footage for S1 is assumed to be zero for this purpose. Determine the total overhead costs allocated to each of the two production departments.
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