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Departmental Overhead Rates Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Alice Chen, the plant manager,
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) $864,000 $216,000 Normal activity (machine hours) 120,000 60,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. 6 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 7.20 per machine hour 3.60 per machine hour 3. Suppose that a machine tool (Product X75) used 70 machine hours from Department A and 140 machine hours from Department 0. A second machine tock (Product Y15) used 140 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 I Plantwide Product X75 1,260 Product Y15 1,260
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