Maricopa Company produces two products and uses a predetermined overhead rate to apply overhead. Maricopa currently applies overhead using a plantwide rate based on direct labor hours. Consideration is being given to the use of departmental overhead rates where overhead would be applied on the basis of direct labor hours in department 1 and on the basis of machine hours in department 2. At the beginning of the year, the following estimates are provided:

Required:
1. Compute the plantwide predetermined overhead rate, and calculate the overhead assigned to each product.
2. Calculate the predetermined departmental overhead rates, and calculate the overhead assigned to each product.
3. Using departmental rates, compute the applied overhead for the year. What is the under- or overapplied overhead for the firm?
4. Prepare the journal entry that disposes of the overhead variance calculated in Requirement 3, assuming it is not material in amount. What additional information would you need if the variance is material to make the appropriate journal entry?LO1 

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Direct labor hours Machine hours Overhead cost Department 1 Department 2 200,000 40,000 20,000 60,000 $120,000 $360,000 Actual results reported by department and product during the year are as follows: Department 1 Department 2 Direct labor hours 196,000 42,000 Machine hours 22,000 64,000 Overhead cost $125,000 $385,000 Product 1 Product 2 Direct labor hours: Department 1 150,000 46,000 Department 2 30,000 12,000 Machine hours: Department 1 13,000 10,000 Department 2 13,000 50,000