Single rate versus departmental rates Bravo Steel Company supplies structural steel products to the construction industry. Its plant has three production depart¬ ments: cutting, grinding, and drilling. The estimated support activity cost and direct labor and machine hour levels for each department for June 2000 follow:

(a) Assume that a single, plant-wide, predetermined cost driver rate is computed by dividing plant-wide support costs by a basis of plant-wide direct labor hours. Determine the support cost applied to job ST101.

(b) Determine the departmental support cost driver rate and support costs applied to job ST101, assuming that machine hours are used as the cost driver application base in the cutting department and that direct labor hours are used as the cost driver for the grinding and drilling departments.

(c) Explain why Bravo Steel might prefer a plant-wide rate or a departmental sup¬ port cost driver rate.

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CUTTING GRINDING DRILLING Support activity cost $42,000 $192,000 $228,000 Direct labor hours 5,000 8,000 12,000 Machine hours 80,000 40,000 30,000 The direct labor and machine hours consumed by job ST101 are as follows: CUTTING GRINDING DRILLING Direct labor hours 2,000 2,500 3,000 Machine hours \ 20,000 3,000 2,000