29. (Departmental overhead rates) Ashford Paving Company uses a predetermined overhead rate to apply overhead to jobs, and the company employs a job order costing system. Overhead is applied to jobs in the Mixing Department based on the number of machine hours used, whereas Paving Department overhead is applied on the basis of direct labor hours. In December 2000, the company estimated the following data for its two departments for 2001:

Mixing Department Paving Department Direct labor hours 1,000 3,500 Machine hours 7,500 1,500 Budgeted overhead cost $60,000 $98,000

a. Compute the predetermined overhead rate that should be used in each department of the Ashford Paving Company.

b. Job #116 was started and completed during March 2001. The job cost sheet shows the following information:

Mixing Department Paving Department Direct material $5,800 $700 Direct labor cost $60 $525 Direct labor hours 12 60 Machine hours 80 22

c. Compute the overhead applied to Job #116 for each department and in total.

d. If the company had computed a companywide rate for overhead rather than departmental rates, do you feel that such a rate would be indicative of the actual overhead cost of each job? Explain.