Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support
Question:
Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support departments support the production departments: Power, General Factory, and Purchasing. Budgeted data on the five departments are as follows:
The company does not break overhead into fixed and variable components. The bases for allocation are power—machine hours; general factory—square feet; and purchasing—purchase orders.
Required:
1. Allocate the overhead costs to the producing departments using the direct method. If required, round your allocation ratios to four decimal places and round allocated costs to the nearest dollar and use the rounded values for the subsequent calculations.
Allocation ratios:
Pesticide | Liquid Fertilizer | |
Square feet | ||
Machine hours | ||
Purchase orders |
Cost assignment:
Pesticide | Liquid Fertilizer | |
Direct costs | $ | $ |
Power | ||
General Factory | ||
Purchasing | ||
Total | $ | $ |
2. Using machine-hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)
Departmental overhead rates | |
Pesticide | $ per machine hour |
Liquid Fertilizer | $ per machine hour |
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu