- Check My Work 1. Allocation = Allocation ratio Budgeted support service costs

Direct Method and Overhead Rates Jasmine 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 Producing Departments Power Overhead $80,000 Square 3,000 feet Machine hours Purchase 20 orders General Factory $316,000 1,403 40 Purchasing Shampoo Conditioner $169,000 3,000 1,345 7 $78,800 9,600 8,000 60 $107,400 8,400 24,000 120 The company does not break overhead into fixed and variable components. The bases for allocation are powermachine hours; general factorysquare feet; and purchasingpurchase 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. Cost assignment: Direct costs Power General Factory Purchasing Total Shampoo Conditioner 107,4 ...z 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Departmental overhead Shampoo Conditioner Feedback 45.07 25.64 rates x per machine hour x per machine hour Check My Work 1. Allocation = Allocation ratio x Budgeted support service costs. 2. Overhead rate is computed by adding the allocated service costs to the overhead costs that are directly traceable to the producing department and dividing this total by some measure of activity, such as direct labor hours or machine hours.