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Grange Company has two departments, Stamping and Assembly. The company uses a job order costing system and computes a predetermined overhead rate in each department.

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Grange Company has two departments, Stamping and Assembly. The company uses a job order costing system and computes a predetermined overhead rate in each department. The Stamping Department bases its rate on machine hours, and the Assembly Department bases its rate on direct labour cost. At the beginning of the year, the company made the following estimatest Direct labour-hours Machines Manufacturing overhead cost Direct labour cost Department Anschly 40,000 125,000 100,000 15,600 $2,550,000 $4,000,000 50,000 $3,200,000 Required: 1. Compute the predetermined overhead rate to be used in each department (Round your stamping department answer to 2 decimal places.) Stamping department Assembly department por machine hour Direct labour cost 2. Assure that the overhead rates you computed in (1) above are in effect. The job cost sheet for Job 407. which was started and completed during the year, shows the following: Department Direct labour-hours Machine-hours Materials requisitioned Direct labour cost Stamping Assembly 25 100 450 20 5.000 $ 1,850 $ 800 Compute the total overhead cost applied to Job 407 Total overhead con 3. Would you expect substantially different amounts of overhead cost to be charged to some jobs if the company used a plantwide overhead rate based on direct labour cost instead of using departmental rates? Yes No

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