Sequential Method of Support Department Cost AllocationStevenson Company is divided into two operating divisions: Battery and Small Motors. Assume thatStevenson uses the sequential method to allocate support department costs to the operating divisions.Power costs are allocated on the basis of the number of machine hours and general factory costs onthe basis of square footage. General Factory is allocated first in the sequential method for thecompany. Support department cost allocations are based on the following data:SupportOperating DivisionsDepartmentsGeneralSmallPowerFactoryBatteryMotors$160,000$430,000$163,000$84,600Machine hours2,0002,0007,0001,500Square footage1,0001,5005,00015,00018,00060,000Overhead costsDirect labor hoursRequired:1. Calculate the allocation ratios for Power and General Factory. (Note: Carry these calculations out tofour decimal places.)Allocation ratios for General FactoryPowerBatterySmall Motors.0476.2381.7143Allocation ratios for PowerBatterySmall Motors.8235.17652. Allocate the support service costs to the operating divisions. Round all amounts to the nearestdollar. Use a minus sign to indicate a subtraction. For those boxes in which no entry is required, leavethe box blank or enter zero (“0”).Support DepartmentsOperating DivisionsSmallPower$General Factory$160,000Direct costsBattery$430,000Motors$163,00084,600Allocate:-430,000General FactoryPower$Total$0$03. Assume divisional overhead rates are based on direct labor hours. Calculate the overhead rate forthe Battery Division and for the Small Motors Division. Round overhead rates to the nearest cent.$Battery overhead rate$Small Motors overhead rate$
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