Single rate versus departmental rates Wright Wood Products has two produc¬ tion departments: cutting and assembly. The company has been using a single pre¬ determined cost driver rate based on plant-wide direct labor hours. That is, the plant-wide cost driver rate is computed by dividing plant-wide support costs by total plant-wide direct labor hours. The estimates for normal costs and normal cost driver levels for 2000 follow:

(a) What was the single plant-wide cost driver rate for 2000?

(b) Determine departmental cost driver rates based on direct labor hours for assembly and machine hours for cutting.

(c) Provide reasons why Wright Wood might use the method in

(a) or in (b).

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Manufacturing support Direct labor hours Machine hours CUTTING ASSEMBLY TOTAL $25,000 $35,000 $60,000 1000 3000 4000 4000 2000 6000