Departmental Overhead Rates Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Harry Whipple, the plant manager, has heard that departmental overhead rates can offer significantly better cost assignments than can a plantwide rate. Mariposa has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) $480,000 $120,000 Normal activity (machine hours) 100,000 50,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. per machine hour 2. Compute predetermined overhead rates for each department using machine hours. Round your answers to one decimal place. Department A Department B per machine hour per machine hour 3. Suppose that a machine tool (Product X75) used 50 machine hours from Department A and 170 machine hours from Department B. A second machine tool (Product Y15) used 170 machine hours from Department A and 50 machine hours from Department B. Compute the overhead cost assigned to each product using the plantwide rate computed in Requirement 1. Plantwide: Product X75 Product Y15 Repeat the computation using the departmental rates found in Requirement 2. Departmental: Product X75 Product Y15 2. Compute predetermined overhead rates for each department using machine hours. Round your answers to one decimal place. Department A Department B per machine hour per machine hour 3. Suppose that a machine tool (Product X75) used 50 machine hours from Department A and 170 machine hours from Department B. A second machine tool (Product Y15) used 170 machine hours from Department A and 50 machine hours from Department B. Compute the overhead cost assigned to each product using the plantwide rate computed in Requirement 1. Plantwide: Product X75 Product Y15 Repeat the computation using the departmental rates found in Requirement 2. Departmental: Product X75 Product Y15 Which of the two approaches gives the fairest assignment? 4. Repeat Requirement 3 assuming the expected overhead cost for Department B is $240,000. Product X75 Product Y15 Plantwide: Departmental: Would you recommend departmental rates over a plantwide rate? Check My Work 3 more Check My Work uses remaining. Previous Next