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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 Producing Departments General Power Factory Purchasing Shampoo Conditioner Overhead $80,000 $314,000 $169,000 $78,500 $107,700 Square feet 3,000 3,000 9,600 8,400 Machine hours 1,403 1,345 8,000 24,000 Purchase orders 60 120 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. 20 40 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 Power General Factory Purchasing Shampoo Conditioner Square feet 0.1250 0.3500 0 0.1250 0.4000 Machine hours 0 0 0 0.2500 0.4500 Purchase orders 0.2 x O 0 0.6000 0.2000 X Show Me How eBook Scro CRC Allocation ratios: Power Purchasing Shampoo General Factory 0 Conditioner 0.3500 Square feet 0.1250 0.1250 0.4000 0 0 0 0.2500 0.4500 x Machine hours Purchase orders 0.2 X 0 0.6000 x 0.2000 x Cost allocation: Power Shampoo Conditioner 80,000 General Factory 316,000 x 316,000 x 78,000 X Direct costs General Factory Purchasing 107,400 x Purchasing 169,000 39,500 x 208,500 x 126,400 x 39,500 x 41,400 x 161,200 x 125,500 x 110,600 x 41,700 120,900 x Power 40,300 x 370,600 x Total 0 0 380,600 x 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Overhead Rates Shampoo 46.33 X per machine hour 15.86 x per machine hour Conditioner Feedback Check My Work 1. Cost allocations are performed in step-down fashion, following a predetermined ranking procedure. Starting with the top ranking department all costs are allocated to the other support and producing departments but never back to any departments above it. 2. Total production dept. cost / total machine hours by dept

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