Question

I did most of this problem theres only a part that I keep getting wrong or not getting. I need help figuring out the blank boxes. that says Purchasing and Power and Question 2. Rest is done

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	$314,000	$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 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:

	Power	General Factory	Purchasing	Pesticide	Liquid Fertilizer
Square feet	.125	0	.125	.35	.4
Machine hours	0	0	0	.75	.25
Purchase orders	.1	0	0	.6	.3

Cost allocation:

	Power	General Factory	Purchasing	Pesticide	Liquid Fertilizer
Direct costs	$90000	$314000	$169000	$78800	$107700
General Factory	39250	-314000	39250	109900	125600
Purchasing		--
Power		--
Total	$	$0	$	$	$

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

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Answer 1

Answer :-

1) Allocation of overhead cost to the producing department using sequential method:-

	Power	General factory	purchasing	pesticides	Liquid fertilizer
Square feet	0.1250 =(1500/12,000)	-	0.1250 = (1500/12000)	0.35 =(4,200/12000)	0.40=(4,800/12000)
Machine hours	-	-	-	0.75 = (24000/32000)	0.25 = (8000/32000)
Purchase order	0.1 (20/200)	-	-	0.6 (120/200)	0.3 (60/200)

Note:- 1) 12,000 = 1500 + 1500 + 4200 +4800

2) 32,000 = 24,000 + 8000

3) 200 = 20 + 60 + 120

Cost allocation:-

	Power	General factory	purchasing	pesticides	Liquid fertilizer
Direct cost	$90,000	$314,000	$169,000	$78,800	$107,700
General factory:-
(0.1250 × 314,000)	39,250	(39,250)
(0.1250 ×314,000)		(39,250)	39,250
(0.35 ×314,000)		(109,900)		109,900
(0.4 × 314,000)		(125,600)			125,600
Total	129,250	-	208,250	188,700	233,300
Purchasing:-
(0.1 × 208,250)	20,825		(20,825)
(0.6 × 208,250)			(124,950)	124,950
(0.3 × 208,250)			(62,475)		62,475
Total	150,075	-	-	313,650	295,775
Power:-
(0.75 × 150,075)	(112,556)			112,556
(0.25 ×150,075)	(37,519)				37,519
	-	-	-	426,206	333,294

2)

pesticides = 426,206/24000 = 17.75/ per machine hour

Liquid fertilizer = 333,294/8000 = 41.66/ per machine hour