diff --git a/nanovllm/engine/block_manager.py b/nanovllm/engine/block_manager.py
index f835a29c2..2ddc6b181 100644
--- a/nanovllm/engine/block_manager.py
+++ b/nanovllm/engine/block_manager.py
@@ -96,17 +96,16 @@ def can_append(self, seq: Sequence) -> bool:
     def may_append(self, seq: Sequence):
         block_table = seq.block_table
         last_block = self.blocks[block_table[-1]]
-        if len(seq) % self.block_size == 1:
+        
+        if len(block_table) < seq.num_blocks:
             assert last_block.hash != -1
             block_id = self.free_block_ids[0]
             self._allocate_block(block_id)
             block_table.append(block_id)
-        elif len(seq) % self.block_size == 0:
-            assert last_block.hash == -1
+            
+        elif len(seq) % self.block_size == 0 and last_block.hash == -1:
             token_ids = seq.block(seq.num_blocks-1)
             prefix = self.blocks[block_table[-2]].hash if len(block_table) > 1 else -1
             h = self.compute_hash(token_ids, prefix)
             last_block.update(h, token_ids)
             self.hash_to_block_id[h] = last_block.block_id
-        else:
-            assert last_block.hash == -1
diff --git a/nanovllm/engine/scheduler.py b/nanovllm/engine/scheduler.py
index 287dd6238..faef6fd85 100644
--- a/nanovllm/engine/scheduler.py
+++ b/nanovllm/engine/scheduler.py
@@ -28,14 +28,23 @@ def schedule(self) -> tuple[list[Sequence], bool]:
         # prefill
         while self.waiting and len(scheduled_seqs) < self.max_num_seqs:
             seq = self.waiting[0]
+            
+            # Move allocate logic forward to ensure the state (seq.num_cached_tokens) 
+            # from prefix cache hits is correctly updated
+            if not seq.block_table:
+                if not self.block_manager.can_allocate(seq):
+                    break    # no budget
+                self.block_manager.allocate(seq)
+            
+            # Calculate the actual num_tokens using the updated seq.num_cached_tokens
             num_tokens = max(seq.num_tokens - seq.num_cached_tokens, 1)
             remaining = self.max_num_batched_tokens - num_batched_tokens
-            if remaining == 0 or (not seq.block_table and not self.block_manager.can_allocate(seq)):    # no budget
+            
+            if remaining == 0:    # no budget
                 break
             if remaining < num_tokens and scheduled_seqs:    # only allow chunked prefill for the first seq
                 break
-            if not seq.block_table:
-                self.block_manager.allocate(seq)
+                
             seq.num_scheduled_tokens = min(num_tokens, remaining)
             if seq.num_scheduled_tokens == num_tokens:
                 seq.status = SequenceStatus.RUNNING