EXHIBIT 2-5 Dickson Company: An Example Using Multiple Predetermined Overhead Rates Step 1: Calculate the estimated total manufacturing overhead cost for each department. MillingDepartmentOverheadCost(Y)=$390,000+($2.00perMH60,000MHs)=$390,000+$120,000=$510,000AssemblyDepartmentOverheadCost(Y)=$500,000+($3.75perDLH80,000DI=$500,000+$300,000=$800,000 Assembly Department Overhead Cost (Y)=$500,000+($3.75 per DLH80,000DLHs) =$500,000+$300,000 Step 2: Calculate the predetermined overhead rate in each department. Milling Department Overhead Rate =$510,000/60,000 machine-hours =$8.50 per machine-hour Assembly Department Overhead Rate =$800,000/80,000 direct labor-hours =$10.00 per direct labor-hour Step 3: Calculate the amount of overhead applied from both departments to Job 407. Milling Department: Overhead Applied to Job 407 =$8.50perMH90MHs =$765 Assembly Department: Overhead Applied to Job 407 =$10.00perDLH20DLHs =$200 Step 4: Calculate the total job cost for Job 407. Step 5: Calculate the selling price for Job 407. Required information This Excel worksheet relates to the Dickson Company example summarized in Exhibit 2-5 2. Change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000, keeping all of the other data the same as in the original example. Consider a new job, Job 408 , with the following characteristics: In your worksheet, enter this new data in the cells for Job 407. What is the new selling price for Job 408 ? 3. Without changing the data for the job from requirement 2 above, what is the selling price for Job 408 if the total number of machine-hours in the Assembly Department increases from 3,000 machine-hours to 4,000 machine-hours? 4. Restore the total number of machine-hours in the Assembly Department to 3,000 machine-hours. And keep the job data the same as it was in Requirement 2. What is the selling price for Job 408 if the total number of direct labor-hours in the Assembly Department decreases from 80,000 direct labor-hours to 40,000 direct labor-hours