Exercise 7-24 Departmental Plantwide Rate Britton Metals Inc. has two production departments with the following characteristics: Department A Department B Total Direct labour hours per month 80,000 80,000 160,000 Machine hours per month 80,000 80,000 Floor space in square metres 8,000 232,000 240,000 Production equipment depreciation $ 400,000 Power cost $ 800 $ 39,200 Some of the company's products are produced exclusively in department A and others require activity only in department B. The following costs are budgeted for the month and form the basis for computing the predetermined overhead rate. Building costs $264,000 Power cost 40,000 Production equipment depreciation 400,000 Total $704,000 Required: 1. Calculate a single predetermined overhead rate for the company, based on direct labour hours 2. Calculate an overhead rate for each production department, based on two different cost drivers: direct labour hours in department A and machine hours in department B. 3. CONCEPTUAL CONNECTION Explain why the two calculations differ