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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:

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:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 General Factory Purchasing Shampoo $316,000 $165,000 $78,800 9,600 8,000 60 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. Overhead Square feet Machine hours Purchase orders Power $80,000 3,000 20 Producing Departments 1,403 40 Power 3,000 1,345 Conditioner $107,700 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. General Factory 8,400 24,000 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 ration: 120 Purchasing Shampoo Conditioner
Transcribed Image Text: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 General Factory Purchasing Shampoo $316,000 $165,000 $78,800 9,600 8,000 60 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. Overhead Square feet Machine hours Purchase orders Power $80,000 3,000 20 Producing Departments 1,403 40 Power 3,000 1,345 Conditioner $107,700 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. General Factory 8,400 24,000 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 ration: 120 Purchasing Shampoo Conditioner
subsequent calculations. Round allocated costs to the nearest dollar. If an amount is zero, enter "0". Allocation ratios: Square feet Machine hours Purchase orders Cost allocation: Direct costs General Factory Purchasing Power Total Shampoo Power Conditioner 0.1250 0 0.100 Power 90,000 39,250 20,425 149,675 0 General Factory 0 0 Overhead Rates 0 General Factory 314,000 -314,000 0 Purchasing 37.89 per machine hour per machine hour 0.1250 0 0 Purchasing 165,000 39,250 -204,250 Shampoo 0.4000 0.2500 0.3000 Shampoo. 78,800 125,600 61,275 37,419 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) 303,094 Conditioner 0.3500 0.7500 0.6000 Conditioner 107,400 109,900 122,550
Transcribed Image Text:subsequent calculations. Round allocated costs to the nearest dollar. If an amount is zero, enter "0". Allocation ratios: Square feet Machine hours Purchase orders Cost allocation: Direct costs General Factory Purchasing Power Total Shampoo Power Conditioner 0.1250 0 0.100 Power 90,000 39,250 20,425 149,675 0 General Factory 0 0 Overhead Rates 0 General Factory 314,000 -314,000 0 Purchasing 37.89 per machine hour per machine hour 0.1250 0 0 Purchasing 165,000 39,250 -204,250 Shampoo 0.4000 0.2500 0.3000 Shampoo. 78,800 125,600 61,275 37,419 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) 303,094 Conditioner 0.3500 0.7500 0.6000 Conditioner 107,400 109,900 122,550
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