Compute departmental overhead rates (Learning Objective 1)

Uncle Bruce’s Snacks makes potato chips, corn chips, and cheese puffs using three dif¬ ferent production lines within the same manufacturing plant. Currently, Uncle Bruce uses a single plantwide overhead rate to allocate its $3,500,000 of annual manufac¬ turing overhead. Of this amount, $1,800,000 is associated with the potato chip line,

$1,000,000 is associated with the corn chip line, and $700,000 is associated with the cheese puff line. Uncle Bruce’s plant is currently running a total of 17,500 machine hours: 11,250 in the potato chip line, 3,450 in the corn chip line, and 2,800 in the cheese puff line. Uncle Bruce considers machine hours to be the cost driver of manu¬ facturing overhead costs.
1. What is Uncle Bruce’s plantwide overhead rate?
2. Calculate the departmental overhead rates for Uncle Bruce’s three production lines. Round all answers to the nearest cent.
3. Which products had been overcosted by the plantwide rate? Which products had been undercosted by the plantwide rate?