Yellowhouse Toy Company manufactures small battery-powered cars that children under eight years of age can drive in a house or yard. Currently, the company has two models: Speed Demon and Luxury Classic. Both cars sell well. The company processes the cars in three departments: Fabrication, Assembly, and Painting. The departmental budgets for the current year are as follows:

Required:
1. Compute overhead rates for each department and for the plant.

2. Compute the estimated overhead cost of 50 units of each model using:

(a) A plant-wide rate.

(b) Departmental rates.
3. Explain why a different cost exists for the cars depending on the use of a plantwide rate or departmental rates.

Transcribed Image Text:

Fabrication Assembly Painting Totals Overhead Machine Costs Hours $ 730,000 25,000 260,000 13,000 10,000 12,000 $1,000,000 50,000 The estimated machine hours for 50 units of each model are: Fabrication Assembly Painting Totals Speed Luxury Demon Classic 50 90 75 40 35 20 160 150