* Data Table Machining Assembly Department Department Job 500 9 MH 12 DL hours 6 DL hours Job 501 ... 18 MH 12 DL hours 6 DL hours Print Done A Requirements 1. Compute Teahen Products' current plantwide overhead rate. 2. Compute refined departmental overhead rates. 3. Which job (Job 500 or Job 501) uses more of the company's resources? Explain. 4. Compute the total amount of overhead allocated to each job if Teahen Products uses its current plantwide overhead rate. 5. Compute the total amount of overhead allocated to each job if Teahen Products uses departmental overhead rates 6. Do both allocation systems accurately reflect the resources that each job used? Explain. 7. Compute the total manufacturing cost and sales price of each job using Teahen Products' current plantwide overhead rate. 8. Based on the current (plantwide) allocation system, how much profit did Teahen Products think it earned on each job? Based on the departmental overhead rates and the sales price determined in Requirement 7, how much profit did it really earn on each job? 9. Compare and comment on the results you obtained in Requirements 7 and 8. Print Done 0 Teahen Products manufactures its products in two separate departments: machining and assembly. Total manufacturing overhead costs for the year budgeted at $1.12 million. Of this amount, the Machining Department incurs $680,000 (primarily for machine operation and depreciation) while the Assembly Department incurs $440,000. Teahen Products estimates it will incur 5,000 machine hours (all in the Machining Department) and 20,500 direct labour hours (5,500 in the Machining Department and 15,000 in the Assembly Department) during the year. Teahen Products currently uses a plantwide overhead rate based on direct labour hours to allocate overhead. However, the company is considering refining its overhead allocation system by using departmental overhead rates. The Machining Department would allocate its overhead using machine hours (MH), but the Assembly Department would allocate its overhead using direct labour (DL) hours. The following chart shows the machine hours (MH) and direct labour (DL) hours incurred by Jobs 500 and 501 in each production department: 5 (Click the icon to view the machine hours and direct labour hours incurred by each department.) Both Jobs 500 and 501 used $1,000 of direct materials. Wages and benefits total $25 per direct labour hour. Teahen Products prices its products at 145% of total manufacturing costs. Requirements Requirement 1. Compute Teahen Products' current plantwide overhead rate. Begin by determining the formula, then compute the rate. (Round your answer to the nearest whole dollar.) Plantwide overhead rate per DL hour Requirement 2. Compute refined departmental overhead rates. Determining the formula, then compute the rate. (Round your answers to the nearest dollar.) = Department allocation rate Machining 1 /machine hour Assembly 1 /DL hour Requirement 3. Which job (Job 500 or Job 501) uses more of the company's resources? Explain. of the company's resources. Job 500 uses Job 501 V machine hours than the other job. The accounting system should show that one job actually the other. Requirement 4. Compute the total amount of overhead allocated to each job if Teahen Products uses its current plantwide overhead rate. Job 500 Job 501 Total direct labour hours x Plantwide allocation rate Overhead allocation Requirement 5. Compute the total amount of overhead allocated to each job if Teahen Products uses departmental overhead rates. Job 500 Job 501 Overhead allocation - Machining Department Overhead allocation - Assembly Department Total overhead allocation Requirement 6. Do both of the allocation systems accurately reflect the resources that each job used? Explain. The single plantwide overhead rate assigned of overhead to both jobs. The departmental rates assign to Job 501 than Job 500 due to the v used. This seems Requirement 7. Compute the total manufacturing cost and sales price of each job using Teahen Products' current plantwide overhead rate. (Round amounts to the nearest dollar. Enter the percentage as a whole number.) Job 500 Job 501 Direct materials Direct labour Manufacturing overhead Total manufacturing costs Markup for pricing (%) Sales price Requirement 8. Based on the current (plantwide) allocation system, how much profit did Teahen Products think it earned on each job? Based on the departmental overhead rates and the sales price determined in Requirement 7, how much profit did it really earn on each job? Calculate the gross profit using the current costing system. Job 500 Job 501 Sales price Less: Total manufacturing costs Gross profit / (loss) Based on the departmental overhead rates and the sales price determined in Requirement 7 how much profit did the company really earn on each job? Calculate the gross profit using the departmental rate costing system. (Use parentheses or a minus sign to show losses.) Job 500 Job 501 Sales price Less: Total manufacturing costs: Direct materials Direct labour Manufacturing overhead Gross profit/ (loss) Requirement 9. Compare and comment on the results you obtained in Requirements 7 and 8 When utilizing a single rate allocation method, Teahen believes that When utilizing a refined costing method, Teahen realizes that