Part IV Sequential distribution of service department costs. Worldwide Chemical Co. consists of three production...
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Part IV Sequential distribution of service department costs. Worldwide Chemical Co. consists of three production departments and four service departments. For the purpose of creating factory overhead rates, the accountant prepared the cost distribution sheet, shown on the next page, containing collected operational data. For the distribution of expenses of the service departments, the following procedures and order of distribution had been decided upon: a. b. c. d. Utilities; 70% on metered hours-power, 30% on floor square footage-heating and lighting. Maintenance; Maintenance hours excluding Utilities Materials Handling; 45% to Preparation; 35% to Mixing; and 20% to Packaging Factory Office: Preparation, 50%; Mixing, 40%; Packaging, 10% Instructions: Complete the cost distribution sheet using the sequential (step-down) method. Factory overhead rates should be based on pounds handled in Preparation and Mixing (500,000 in Preparation; 300,000 in Mixing) and on direct labor cost of $10,000 in Packaging (Round all amounts to the nearest dollar or the nearest whole percent
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