Sequential Method

Jasmine Company manufactures both pesticide and liquid fertilizer, 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	General Factory	Purchasing	Pesticide	Liquid Fertilizer
Overhead	$90,000	$312,000	$169,000	$78,800	$107,700
Square feet	1,500		1,500	4,200	4,800
Machine hours		1,403	1,345	24,000	8,000
Purchase orders	20	40		120	60

The company does not break overhead into fixed and variable components. The bases for allocation are powermachine hours; general factorysquare feet; and purchasingpurchase 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.

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 Pesticide Liquid Fertilizer Square feet 0.1250 o 0.1250 0.350 0.4 Machine hours 0 o 0.75 0.25 Purchase orders 0.1 0 0.6 0.3 Cost allocation: Power General Factory Purchasing Pesticide Liquid Fertilizer Direct costs 90,000 $ 312,000 $ 169,000 78,800 $ 107,700 General Factory 39,000 Purchasing 0 Power Total 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Overhead Rates Pesticide per machine hour Liquid Fertilizer per machine hour