(Plant vs. department.i! OH rates! Sutton Industries has two departments, Fabrication and Finishing. Three workers oversee the 25 machines in Fabri¬ cation. Finishing uses 35 crafters to hand polish output, which is then run through buffing machines. Sutton’s Product CG9832-09 uses the following amounts of direct labor and machine time in each department:

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 of Product CG9832-09 using this rate?

b. Sutton’s auditors inform management that departmental rates using ma¬ chine hours in Fabrication and direct labor hours in Finishing would be more appropriate than a plantwide rate. What would the rates be for each department? How much overhead would have been assigned to each unit of Product CG9832-09 using departmental rates?

c. Discuss why departmental rates are more appropriate than plantwide rates for Sutton Industries.LO1.

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Machine hours Direct labor hours Fabrication Finishing 0.15 2.00 8.00 0.02 Following are the budgeted overhead costs and volumes for each depart- ment for the upcoming year: Fabrication Finishing Budgeted overhead $635,340 $324,000 Budgeted machine hours 72,000 9,300 Budgeted direct labor hours. 4,800 48,000