Allen's Fine Furnishings manufactures upscale custom furniture. Allen's currently uses a plantwide overhead rate based on direct labor hours to allocate its $ 1,200,000 of manufacturing overhead to individual jobs.? However, Dana Gillo ?, owner and? CEO, is considering refining the? company's costing system by using departmental overhead rates.? Currently, the Machining Department incurs $780,000 of manufacturing overhead while the Finishing Department incurs $420,000 of manufacturing overhead. Dana has identified machine hours? (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor? (DL) hours as the primary cost driver in the Finishing Department. Requirement 1. Compute the plantwide overhead rate assuming that Allen's expects to incur 20,000 total DL hours during the year. First identify the? formula, then compute the rate. ?(Round your answer to the nearest whole? dollar.) Requirement 2. Compute departmental overhead rates assuming that Allen's expects to incur 15 comma 600 MH in the Machining Department and 17,500 DL hours in the Finishing Department during the year. First identify the? formula, then compute the rate for each department. Requirement 3. If Allen's continues to use the plantwide overhead? rate, how much manufacturing overhead would be allocated to Job 450 and Job? 455? First identify the? formula, then calculate the amount of manufacturing overhead that would be allocated to the jobs if the plantwide overhead rate is used. Requirement 4. If

Allen's

uses departmental overhead? rates, how much manufacturing overhead would be allocated to Job 450 and Job? 455?

Use the following table to calculate the amount of manufacturing overhead that would be allocated to the jobs if the departmental overhead rates are used. ?(Round your answers to the nearest whole? dollar.)

Job 450

Job 455

Machining

Finishing

Total overhead allocation

Requirement 5. Based on your answers to Requirements 3 and? 4, does the plantwide overhead rate overcost or undercost either? job? Explain. If

Allen's

sells its furniture at? 125% of? cost, will its choice of allocation systems affect product? pricing? Explain.

The single plantwide rate

Job 450 by $

and

Job 455 by $

.

Since

Allen's

sets its sales price at? 125% of? cost, and the job cost is

?

affected

not affected

by the allocation system it? uses, its sales price will

?

be affected

not be affected

by the allocation system it uses.