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:

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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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