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Departmental Overhead Rates Jennings Corp. has two manufacturing departments: Molding and Polishing. The company has provided the following data for its two departments: Molding Polishing
Departmental Overhead Rates Jennings Corp. has two manufacturing departments: Molding and Polishing. The company has provided the following data for its two departments: Molding Polishing Total Estimated overhead $400,000 $60,000 $460,000 Direct labor hours (expected and actual): Product A 1,000 5,000 6,000 Product B 4,000 15,000 19,000 Total 5,000 20,000 25,000 Machine hours: Product A 3,400 3,000 6,400 Product B 1,600 2,000 3,600 Total 5,000 5,000 10,000 Jennings Corp. produces 20,000 units of Product A and 50,000 of Product B. Currently, the company uses a plant-wide rate to assign overhead costs. 1. Calculate the plant-wide rate using direct labor hours and assign overhead to the two products. Show all work. Total Per Unit Assigned Overhead to Prod. A $ $ Assigned Overhead to Prod. B $ - $ The firm is considering switching to department rates instead. Under this system, machine hours will be used to assign the overhead of the Molding Department, and direct labor hours will be used to assign the overhead of the Polishing Department. 2. Calculate the overhead rates for each department. Round your answer to the nearest dollar. Show all work. Molding $ Polishing per machine hour per direct labor hour 3. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. Round your answers to the nearest cent. Show all work. Total Assigned Overhead to Prod. A $ Assigned Overhead to Prod. B $ Per Unit $ per unit per unit 4. How does this compare with the plantwide rate unit cost, using direct labor hours? Relative to the plantwide rate, the cost for Prod A decreased] and the costs for Prod B [increased / [increased decreased]. 5. What if the machine hours in Molding were 1,200 for Product A and 3,800 for Product B? (assume direct labor hours are unchanged). Calculate the overhead cost per unit for each product using departmental rates. Round your answers to the nearest cent. Show all work. Total Unit Overhead Cost Assigned Overhead to Prod. A $ $ per unit Assigned Overhead to Prod. B $ $ per unit 6. Compare your answer in Q5 to the plant-wide with the plantwide rate unit costs calculated in Requirement 1. What can you conclude from this outcome
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