Bergeron Furnishings manufactures upscale custom furniture. Bergeron Furnishings currently uses a plantwide overhead rate based on direct labour hours to allocate its $989,000 of manufacturing overhead to individual jobs. However, Werner Bergeron, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $662,200 of MOH while the Finishing Department incurs $326,800 of MOH. Ernie has identified machine hours (MH) as the primary MOH cost driver in the Machining Department and direct labour (DL) hours as the primary cost driver in the Finishing Department.

Bergeron Furnishings manufactures upscale custom furniture. Bergeron Furnishings currently uses a plantwide overhead rate based on direct labour hours to allocate its $989,000 of manufacturing overhead to individual jobs. However, Werner Bergeron, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $662,200 of MOH while the Finishing Department incurs $326,800 of MOH. Ernie has identified machine hours (MH) as the primary MOH cost driver in the Machining Department and direct labour (DL) hours as the primary cost driver in the Finishing Department. (Click the icon to view the job information.) Requirements Requirement 1. Compute the plantwide overhead rate assuming that Bergeron expects to incur 23,000 total DL hours during the year. First identify the formula, and then compute the rate. (Round your answer to the nearest whole dollar.) Total manufacturing overhead 1 Cost allocation base (estimated) Plantwide overhead rate Requirement 2. Compute departmental overhead rates assuming that Bergeron expects to incur 15,400 MH in the Machining Department and 17,200 DL hours in the Finishing Department during the year. First identify the formula, and then compute the rate for each department. (Round your answers to the nearest whole dollar.) Department overhead rate Total department overhead 1 Cost allocation base (estimated) Machining mach. hour Finishing DL hour Requirement 1. Compute the plantwide overhead rate assuming that Bergeron expects to incur 23,000 total DL hours during the year. First identify the formula, and then compute the rate. (Round your answer to the nearest whole dollar.) Total manufacturing overhead 1 Cost allocation base (estimated) Plantwide overhead rate Requirement 2. Compute departmental overhead rates assuming that Bergeron expects to incur 15,400 MH in the Machining Department and 17,200 DL hours in the Finishing Department during the year. First identify the formula, and then compute the rate for each department. (Round your answers to the nearest whole dollar.) Department Total department overhead / Cost allocation base (estimated) overhead rate Machining mach. hour Finishing DL hour Requirement 3. If Bergeron continues to use the plantwide overhead rate, how much manufacturing overhead would be allocated to Job 450 and Job 455? First identify the formula, and then calculate the amount of manufacturing overhead that would be allocated to the jobs if the plantwide overhead rate is used. (Round your interim and final answers to the nearest whole dollar.) Allocated manufacturing Plantwide cost allocation rate x Cost allocation base (actual) overhead Job 450 Job 455 x Requirement 4. If Bergeron uses departmental overhead rates, how much MOH 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 interim and final 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 of the jobs? Explain. If Bergeron sells his furniture at 125% of cost, will his choice of allocation systems affect product pricing? Explain. (Round your answers to the nearest whole dollar.) The single plantwide rate V Job 450 by $ and Job 455 by $ Since Bergeron sets his sales price at 125% of cost and the job cost is V by the allocation system he uses, his sales price will v by the allocation system he uses