Chapter 7 Homework EX.07.21

Sequential Method Belami Company manufactures shampoo and hair 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: Producing Departments Support Departments General Power Factory Purchasing Shampoo Conditioner Overhead $94.000 $430,000 $150,000 $145,000 $170,000 Square feet 3,000 3,000 9,600 0,400 Machine hours 1,403 1,345 8,000 24,000 Purchase orders 20 40 7 7 60 120 The company does not break overhead inta fixed and variable components. The bases for a location are power-machine hours, general factory-square feet; and purchasing-purchase orders. The company has decided to use the sequential method of allocation instead of the direct mathad. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. Carry out allocation ratios to four decimal places. Use these numbers for subsequent calculations. Round allocated costs to the nearest dollar. If an amount is zero, enter "O". Allocation ratios: Power General Factory Purchasing Shampoo Conditioner Square feet Machine hours Purchase orders Cost allocation: Power General Factory Purchasing Shampoo Conditioner Direct costs General Factory Purchasing Power Totul $ 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Overhead Rates Shamana s per machine hour Conditioner per machine hour