Chapter 7 Homework ex 20

Direct Method and Overhead Rates Bclami 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 cata on the five departments are as follows: Support Departments Producing Departments General Power Factory Purchasing Shampoo Conditioner $94,000 $430,000 $150,000 $146,000 $170,000 Overhead Square feet 3,000 3,000 9,600 8.400 Machine hours 1,103 1,345 9,000 24,000 20 7 60 Purchase orders 40 120 The company does not break overhead inta fixed and variable components. The bases for allocation are power-machine hours: general factory square foot; and purchasing-purchase orders. , Required: 1. Allocate the overhead costs to the producing departments using the direct method. If required, round your allocation ratios to four decimal places and round allocated costs to the nearest dollar and use the rounded values for the subsequent calculations. Allocation ratios: Shampoo Conditioner Square feet 170,000 X Machine hours 70,500 X x Purchase orders 146,000 x Cost assignment: Shampoo Conditioner Direct costs $ 146,000 Power 23,500 $ 170,000 70,500 200,681 General Factory 229,319 Purchasing 50,000 X 100,000 X Total $ 541,181 x 146,000 X x 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Departmental overhead rates Shampoo $ 56.10 per machine hour Conditioner # 22.55 22.55 per machine hour Fechas