(Plant vs. department OH rates) Ogden Manufacturing has two departments: Fab¬ rication and Assembly. Fabrication is composed of 1 worker and 15 machines, and Assembly has 20 workers and few machines. One of the company’s products passes through both departments and uses the following quantities of direct labor and machine time:

a. What is the plantwide rate for overhead application based on machine hours for the upcoming year? How much overhead will be assigned to each unit using this rate?

b. The company’s auditors inform Ogden that it would be more appropriate to use machine hours as the application base in Fabrication and direct labor hours in Assembly. What would the rates be for each department? How much overhead would have been assigned to each unit of product using de¬ partmental rates?LO1

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Machine hours Direct labor hours FABRICATION 8.00 .02 ASSEMBLY .15 2.00 Following are the budgeted overhead costs and volumes for each department for the upcoming year: Estimated overhead Estimated machine hours Estimated direct labor hours FABRICATION ASSEMBLY $624,240 $324,000 72,000 9,300 4,800 +8,000