allocated to the three operating departments. Then each operating department would compute its own overhead rate. The overhead rate in Molding would be based on machine-hours and the rates in Component and Assembly would be based on direct labor-hours. The service departments' estimated costs for the coming year are as follows: Variable overhead cost Fixed overhead cost Total overhead cost Service Departments Power Maintenance $ 640,000 25,000 1,200,000 375,000 $1,840,000 $ 400,000 The Power Department would allocate its variable costs to the operating departments based on estimated kilowatt hours used and it would allocate its fixed costs based on the percentage of peak-period capacity required. The Maintenance Department would allocate its variable costs to the operating departments based on estimated maintenance hours used and it would allocate its fixed costs based on the percentage of peak-period capacity required. The corresponding data for allocating service department costs to operating departments are as follows: Operating Departments Molding Component Assembly 12,000 36,000 50% 32,000 35% 15% Power department: Estimated kilowatt hours used Percentage of peak-period capacity Maintenance Department: Estimated maintenance hours used Percentage of peak-period capacity 9,000 70% 2,500 20% 1,000 10% The company also provided the following estimated data for its three operating departments: Operating Departments Molding Component Assembly Departmental costs: Direct materials Direct labor Manufacturing overhead Total departmental costs Allocation bases: Direct labor-hours Machine-hours $1,630,000 $3,000,000 350,000 2,000,000 1,960,500 1,620,000 $3,940,500 $6,620,000 $ 25,000 1,300,000 2,399,500 $3,724,500 150,000 50,000 87,500 200,000 12,500 1. Compute the company's predetermined plantwide overhead rate. 2. Assume the company decides to use departmental overhead rates. a. Using the direct method, allocate the variable and fixed service department costs to the operating departments. b. Calculate the predetermined departmental overhead rates for each of the three operating departments. 3. One of Hobart's products is a small attach case that uses the following machine-hours and direct labor-hours in the three operating departments: Machine Hours 3,000 800 Molding Department Component Department Assembly Department Total hours Direct Labor- Hours 1,000 2,500 4,000 7,500 3,800 a. Calculate the amount of overhead that would be applied to this attach case using the plantwide approach. b. Calculate the amount of overhead that would be applied to this attach case using the departmental approach. 4a. Is the plantwide approach overcosting or undercosting the attach case compared to the departmental approach? Complete this question by entering your answers in the tabs below. Req 1 Reg 2a Req 2b Req 3a Req 3b Req 4a Compute the company's predetermined plantwide overhead rate. (Round your final answer to 2 decimal places.) Predetermined plantwide overhead rate per DLH
