Sequential Method
Jasmine Company manufactures both pesticide and liquidfertilizer, with each product manufactured in separate departments.Three support departments support the production departments:Power, General Factory, and Purchasing. Budgeted data on the fivedepartments are as follows:
|
Support Departments | ProducingDepartments |
| Power | General
Factory | Purchasing | Pesticide | Liquid
Fertilizer |
| Overhead | $80,000 | $314,000 | $165,000 | $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 variablecomponents. 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 ofallocation instead of the direct method. The support departmentsare ranked in order of highest cost to lowest cost.
Required:
1. Allocate the overhead costs to the producingdepartments using the sequential method. Carry out allocationratios to four decimal places. Use these numbers for subsequentcalculations. Round allocated costs to the nearest dollar. If anamount is zero, enter "0".
Allocation ratios:
| Power | General Factory | Purchasing | Pesticide | Liquid Fertilizer |
| Square feet | | | | | |
| Machine hours | | | | | |
| Purchase orders | | | | | |
Cost allocation:
| Power | General Factory | Purchasing | Pesticide | Liquid Fertilizer |
| Direct costs | $ | $ | $ | $ | $ |
| General Factory | | | | | |
| Purchasing | | | | | |
| Power | | | | | |
| Total | $ | $ | $ | $ | $ |
2. Using machine hours, compute departmentaloverhead rates. (Round the overhead rates to the nearest cent.)
| Overhead Rates |
| Pesticide | $ per machine hour |
| Liquid Fertilizer | $ per machine hour |
