Reference no: EM132567393

Bake-Ri is a company that makes high quality whole grain bread and sell the bread to the malls in JABODETABEK. In making bread, there are two departments directly involved namely Mixing and decorating, while those that help to maintain inventory and also the availability of raw materials are purchasing and storage. Of course in the making of bread many costs that arise such as direct material, direct labor, and factory overhead. Factory Overhead will be in all departments of Bake-Ri. The total factory overhead costs that arise are as much as $ 135,000, with details of $ 50,000 for mixing, $ 45,000 for decorating, $ 25,000 for Purchasing, and $ 15,000 for storage. For the most weight that appears in the process of making bread is for the purchasing department to provide support for the mixing as much as 50%, for decorating as much as 20%, and to storage as much as 30%. Storage provides support for mixing as much as 30%, for decorating as much as 50%, while the rest is for other supporting departments. Before conducting its business, the purchasing department provides support to storage department in order to maintain the availability of the raw material for making bread.

Question 1: The method of calculating the factory overhead allocation within the company? Give reasons why you should use that method compared to other methods.