Chapter 7 Homework EX.07.20

Direct Method and Overhead Rates Belami Company manufactures both shampoo and conditioner, 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: Support Departments Producing Departments General Power Factory Shampoo Conditioner Purchasing $150,000 Overhead $94,000 S430,000 $146,000 Square feet 3,000 3,000 9,600 $170,000 8,400 24,000 Machine hours 1,403 1,345 8,000 Purchase orders 20 40 7 50 120 The company does not break uverheaci intu fixed and variable compunents. The bases for allocation are power-machine huurs; general factury-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: Conditioner Shampoo 0.25 x Square feet 0.25 x Machine hours 70,500 x Purchase orders 146,000 x Cost assignment Shampoo Conditioner Direct cos $146,000 170,000 Power 23,500 70,500 General Factory 229,319 200,681 Purchasing 50,000 X 100,000 X Total $ 541,181 X $X 541,181 X