Calculating Manufacturing Overhead Rates

Glassman Company, accumulated the following data for 2012:

Milling Department manufacturing overhead $344,000

Finishing Department manufacturing overhead $120,000

Machine hours used

Milling Department 10,000 hours

Finishing Department 2,000 Hours

Labor hours used

Milling Department 1,000 hours

Finishing Department 1,000 hours

Calculate the plant wide manufacturing overhead rate using machine hours as the allocation base.

Calculate the plant wide manufacturing overhead rate using direct labor hours as the allocation base.

Calculate department overhead rates using machine hours in Milling and direct labor hors in Finishing as the allocation bases.

Calculate department overhead rates using direct labor hours in Milling and machine hours in Finishing as the allocation bases.

Which of these allocation systems to be the most appropriate? Explain.