Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen: Support Departments Producing Departments S1 S2 Cutting Sewing Direct costs $180,000 $150,000 $122,000 $90,500 Normal activity: Number of employees — 30 63 147 Maintenance hours 1,200 — 16,000 4,000 Assume that Quillen uses the sequential method to allocate support department costs. S1 is allocated first, then S2. Required: 1. Calculate the cost assignment ratios to be used under the sequential method for S2, Cutting, and Sewing. Enter your answers as decimal values, carried out to four decimal places, if necessary. Allocation ratios for S1: S2 fill in the blank 1 Cutting fill in the blank 2 Sewing fill in the blank 3 Allocation ratios for S2: Cutting fill in the blank 4 Sewing fill in the blank 5 2. Allocate the overhead costs to the producing departments by using the sequential method. Use a minus sign to indicate a subtraction. For those boxes in which no entry is required, leave the box blank or enter
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen:
| Support Departments | Producing Departments | ||||
| S1 | S2 | Cutting | Sewing | ||
| Direct costs | $180,000 | $150,000 | $122,000 | $90,500 | |
| Normal activity: | |||||
| Number of employees | — | 30 | 63 | 147 | |
| Maintenance hours | 1,200 | — | 16,000 | 4,000 |
Assume that Quillen uses the sequential method to allocate support department costs. S1 is allocated first, then S2.
Required:
1. Calculate the cost assignment ratios to be used under the sequential method for S2, Cutting, and Sewing. Enter your answers as decimal values, carried out to four decimal places, if necessary.
Allocation ratios for S1:
| S2 | fill in the blank 1 |
| Cutting | fill in the blank 2 |
| Sewing | fill in the blank 3 |
Allocation ratios for S2:
| Cutting | fill in the blank 4 |
| Sewing | fill in the blank 5 |
2. Allocate the overhead costs to the producing departments by using the sequential method. Use a minus sign to indicate a subtraction. For those boxes in which no entry is required, leave the box blank or enter zero ("0").
| Support Departments | Producing Departments | ||||||||||||||||||
| Allocate: | S1 | S2 | Cutting | Sewing | |||||||||||||||
| Direct costs | $fill in the blank 6 | $fill in the blank 7 | $fill in the blank 8 | $fill in the blank 9 | |||||||||||||||
| S1 | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 | fill in the blank 13 | |||||||||||||||
| S2 | fill in the blank 14 | fill in the blank 15 | fill in the blank 16 | fill in the blank 17 | |||||||||||||||
| Total | $fill in the blank 18 | $fill in the blank 19 | $fill in the blank 20 | $fill in the blank 21 |
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