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 on the five departments are as follows: Overhead Square feet Machine hours Purchase orders Direct costs Power General Factory Purchasing Support Departments Total Power $90,000 3,000 Shampoo Conditioner 20 General Factory Purchasing Shampoo Conditioner $312,000 $165,000 $78,800 $107,700 8,400 3,000 1,345 24,000 1,403 Shampoo 40 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. 7 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 the subsequent calculations. Cost assignment: Producing Departments Conditioner 9,600 8,000 60 per machine hour per machine hour 120 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Departmental overhead rates
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 on the five departments are as follows: Overhead Square feet Machine hours Purchase orders Direct costs Power General Factory Purchasing Support Departments Total Power $90,000 3,000 Shampoo Conditioner 20 General Factory Purchasing Shampoo Conditioner $312,000 $165,000 $78,800 $107,700 8,400 3,000 1,345 24,000 1,403 Shampoo 40 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. 7 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 the subsequent calculations. Cost assignment: Producing Departments Conditioner 9,600 8,000 60 per machine hour per machine hour 120 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Departmental overhead rates
Chapter1: Financial Statements And Business Decisions
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Direct Method and
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Transcribed Image Text: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:
Overhead
Square feet
Machine hours
Purchase orders
General
Factory Purchasing Shampoo
$312,000
$165,000
$78,800
3,000
9,600
1,345
8,000
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.
Direct costs
Power
General Factory
Purchasing
Total
Power
Support Departments
$90,000
Shampoo
Conditioner
3,000
20
1,403
Shampoo
40
7
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:
Conditioner
Producing Departments
Conditioner
per machine hour
per machine hour
$107,700
8,400
24,000
120
2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)
Departmental overhead rates
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