The overarching goal of this problem is to calculate the amount of SG&A overhead charged to each of Prestige’s three business segments using direct vs. sequential allocation, then evaluate the relative solutions. The learning objectives are to apply direct and sequential allocation methods, evaluate the relative impact of allocation methods on the amount of overhead charged to each business segment , and use basic Excel commands to complete the analysis.

The data work sheets used in the analysis are Income Statement 12-31- x6, Balance Sheet 12-31-20x6, and Allocation Data for 20x6. You will complete the DB Problem 11.2 Template.

Do the following:

Calculate the percentage of shared resources within the support departments and use the results to assign an allocation sequence for the sequential allocation analysis in Rows J and K .

Calculate overhead to be assigned to the business segments using direct allocation methods.

Calculate the overhead to be charged to each new car and used car sold and repair hours charged.

Calculate the overhead to be charged to each department Management supports based on number of employees.

Enter the total overhead charged as a negative, showing that no cost remains in Management .

Calculate the overhead to be charged to each department , Customer Service and General Overhead, supports based on number of service calls and square feet, respectively.

Enter the total overhead charged as a negative, showing that no cost remains in Customer Service or General Overhead.

Calculate the Marketing overhead to be charged to the three business segments.

Enter the total overhead charged as a negative, showing that no cost remains in Marketing.

Calculate the overhead to be charged to each new car and used car sold and repair hours charged.

REQUIRED:

a. Turn in your worksheet with the direct and sequential allocations completed.

b. Does it make a difference which method you use? Why or why not?