Refer to the data in Exercise 7.20. 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.
In exercise 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:

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.

Required:
1. Allocate the overhead costs to the producing departments using the sequential method.
2. Using machine hours, compute departmental overhead rates.

Support Departments General Factory S314,000 Producing Departments Pesticide iquid Fertilizer Power Purchasing $167,000 1,500 1,345 S78,900 4,200 24,000 120 $90,000 1,500 Overhead Square feet Machine hours Purchase orders $107,800 4,800 8,000 60 1,403 40 20