1. Departmental Overhead Rates

   Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Alice Chen, 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)	$660,000	$165,000
   Normal activity (machine hours)	110,000	55,000

   Required:

   1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. $fill in the blank 1 per machine hour

   2. Compute predetermined overhead rates for each department using machine hours. Round your answers to one decimal place.

   Department A	$fill in the blank 2 per machine hour
   Department B	$fill in the blank 3 per machine hour

   3. Suppose that a machine tool (Product X75) used 70 machine hours from Department A and 160 machine hours from Department B. A second machine tool (Product Y15) used 160 machine hours from Department A and 70 machine hours from Department B. Compute the overhead cost assigned to each product using the plantwide rate computed in Requirement 1.

   	Product X75	Product Y15
   Plantwide:	$fill in the blank 4	$fill in the blank 5

   Repeat the computation using the departmental rates found in Requirement 2.

   	Product X75	Product Y15
   Departmental:	$fill in the blank 6	$fill in the blank 7

   Which of the two approaches gives the fairest assignment?

   DepartmentalPlantwide

   4. Repeat Requirement 3 assuming the expected overhead cost for Department B is $330,000.

   	Product X75	Product Y15
   Plantwide:	$fill in the blank 9	$fill in the blank 10
   Departmental:	$fill in the blank 11	$fill in the blank 12

   Would you recommend departmental rates over a plantwide rate?

   I recommend a plantwide rateI recommend departmental ratesIt doesn't matter which is chosen