[ B D & Q Pa P7.32 Plantwide and departmental overhead rates: manufacturer Perfect Image Ltd produces two types of computer printers, a laser model and an inkjet model, which pass through two production departments, fabrication and assembly. The following data relate to the year just ended: LO7.4 Budgeted overhead Expected activity (in direct labour hours) Expected activity (in machine hours) Fabrication $270 000 22 500 45 000 Assembly $135 000 90 000 12 375 Actual overhead costs for the year were $450 000. Laser 11 250 $90 000 Inkjet 112 500 $675 000 Units produced Prime costs (material and labour) Direct labour hours used: Fabrication 21 000 1 500 30 000 72 000 Assembly Machine hours used: Fabrication Assembly 15 000 1 500 30 000 12.000 CHAPTER SEVEN A CLOSER LOOK AT OVERHEAD COSTS 21 000 is used Fabrication Assembly Machine hours used: Fabrication Assembly 1 500 30 000 72 000 15 000 1 500 30 000 12 000 CHAPTER SEVEN A CLOSER LOOK AT OVERHEAD COSTS Required: 1. Calculate the predetermined plantwide overhead rate based on direct labour hours. 2. Calculate the per unit cost of the laser and inkjet printers, based on a plantwide overhead rate assuming that direct labour hours is the cost driver. 3. Calculate predetermined departmental overhead rates, assuming that machine hours is the cost driver in fabrication and direct labour hours is the cost driver in assembly. 4. Calculate the per unit cost of the laser and inkjet printers, based on the departmental overhead rates. 5. Estimate the amount of underapplied or overapplied overhead using: (a) a plantwide overhead rate (b) departmental overhead rates. 6. Which approach is best for Perfect Image, a plantwide overhead rate or departmental overhead rates? Why? Predetermined plantwide overhead rate: different periods pricing: manufacturer P7433