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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,
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 General Factory Liquid Fertilizer Power Purchasing Pesticide Overhead $90,000 $312,000 $165,000 $78,500 $107,400 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 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. 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: 1. Allocate the overhead costs to the producing departments using the sequential method. Carry out allocation ratios to four decimal places. Use these num 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 0 0.1250 0.3500 0.4000 Machine hours 0 0 0 0.7500 0.2500 Purchase orders 0.1000 0 o 0.6000 0.3000 Cost allocation: Power General Factory Purchasing Pesticide Liquid Fertilizer Direct costs 90,000 312,000 165,000 78,500 107,400 General Factory 39,000 312,000 39,000 109,200 124,800 Purchasing 16,500X 165,000 X 99,000 X 49,500 X Power 145,500 x 109,125 X 36,375 X Total 395,825 x 318,075 x Accounting numeric field 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.) Overhead Rates Pesticide 16.49 X per machine hour Liquid Fertilizer 39.76 X per machine hour
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