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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: Overhead Square feet Machine hours Purchase orders Support Departments General Factory $316,000 Power $80,000 3,000 20 1,403 Producing Departments 40 Purchasing Shampoo Conditioner $165,000 $78,800 9,600 3,000 1,345 8,000 $107,700 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. 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. 8,400 24,000 120

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: Overhead Square feet Machine hours Purchase orders Support Departments General Factory $316,000 Power $80,000 3,000 20 1,403 Producing Departments 40 Purchasing Shampoo Conditioner $165,000 $78,800 9,600 3,000 1,345 8,000 $107,700 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. 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. 8,400 24,000 120

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: Overhead Square feet Machine hours Purchase orders Support Departments Power Required: $80,000 3,000 20 General Factory $316,000 1,403 40 Producing Departments Purchasing Shampoo Conditioner $165,000 $78,800 3,000 9,600 1,345 8,000 - 60 $107,700 8,400 24,000 120 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. 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.
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: Overhead Square feet Machine hours Purchase orders Support Departments Power Required: $80,000 3,000 20 General Factory $316,000 1,403 40 Producing Departments Purchasing Shampoo Conditioner $165,000 $78,800 3,000 9,600 1,345 8,000 - 60 $107,700 8,400 24,000 120 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. 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: Square feet Machine hours Purchase orders Cost allocation: Direct costs General Factory Purchasing Power Total Power Shampoo Conditioner Power General Factory General Factory Overhead Rates Purchasing per machine hour per machine hour Purchasing Shampoo Shampoo 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Conditioner Conditioner
Transcribed Image Text: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: Square feet Machine hours Purchase orders Cost allocation: Direct costs General Factory Purchasing Power Total Power Shampoo Conditioner Power General Factory General Factory Overhead Rates Purchasing per machine hour per machine hour Purchasing Shampoo Shampoo 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Conditioner Conditioner
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