Feline Company uses a normal job-order costing system. Currently, a plantwide overhead rate based on direct labor is used. Lola Katz, the plant manager, has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Some jobs spend most of their time in Department A, while others spend most of their time in Department B. Feline has the following data for its two departments for the coming year:

Department A Department B

Expected overhead cost $75,000 $33,000

Expected direct labor hours 30,000 hrs 24,000 hrs

A. Compute the predetermined plantwide overhead rate. $_____ per direct labor hour

B. Compute the departmental overhead rates. (When required, carry out your answers to 3 decimal places.)

Dept. A $_____ 2 per direct labor hour

Dept. B $_____ 3 per direct labor hour

C. Which overhead rate would you recommend?

Plantwidee or Departmental