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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
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 Overhead costs (expected) $576,000 $144,000 Normal activity (machine hours 120,000 60,000 Required: 1. Computea 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 per machine hour Department B per machine hour 3. Suppose that a machine tool (Product X75) used 70 machine hours from Department A and 150 machine hours from Department B. A second machine tool (Product Y15) Used 150 machine hours from Department A and 70 machine hours from Department 2. Compute the overhead cost assigned to each product using the plantwide rate computed in Requirement 1. Product X75 Product Y15 Plantwide: Repeat the computation using the departmental rates found in Requirement 2. Product X75 Product Y15 Departmental C Which of the two approaches gives the forest assignment? 4. Repeat Requirement 3 assuming the expected overhead cast for Department B is $288,000. Product X75 Product Y15 Plantwide Departmental: Would you recommend departmental rates over a plantwide rate
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