Sequential Method

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
	Power	General Factory	Purchasing	Shampoo	Conditioner
Overhead	$90,000	$316,000	$169,000	$78,500	$107,700
Square feet	3,000		3,000	9,600	8,400
Machine hours		1,403	1,345	8,000	24,000
Purchase orders	20	40		60	120

The company does not break overhead into fixed and variable components. The bases for allocation are powermachine hours; general factorysquare feet; and purchasingpurchase orders.

The company has decided to use the sequential method of allocation instead of the direct method. 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 "0".

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
Total

2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)

	Overhead Rates
Shampoo	per machine hour
Conditioner	per machine hour