Henry Jackson, the new controller of United Manufacturing Company $($UMC$)$ believes that the company should use the dual rate method of allocating overhead costs of its Materials Management

Department to its Machining and Assembly Departments instead of the single rate method, which the company has used since its inception $20$ years ago. Jackson's Materials Management

Department has an annual capacity of $6,000$ labor$-$hours and a budgeted fixed cost of $$240,000.$ The budgeted variable cost per labor$-$hour of the Materials Management Department is $$20.$

Jackson gathers the following information:

Data table

Requirements

Using the single$-$rate method, allocate Materials Management Department

costs to the Machining and Assembly Departments in these three ways:

a$.$ Calculate the budgeted rate based on the budgeted number of Materials

Management Department labor$-$hours and allocate costs based on the

budgeted use of Materials Management labor$-$hours in the Machining and

Assembly Departments.

b$.$ Calculate the budgeted rate based on the budgeted number of Materials

Management Department labor$-$hours and allocate costs based on actual

usage.

c$.$ Calculate the budgeted rate based on the practical capacity of Materials

Management Department labor$-$hours and allocate costs based on actual

usage.

Using the dual$-$rate method, compute the amount allocated to the Machining

and Assembly Departments when $($a$)$ the budgeted fixed$-$cost rate is

calculated using budgeted fixed costs and practical capacity of the Materials

Management Department, $($b$)$ fixed costs are allocated based on the

budgeted fixed$-$cost rate and budgeted usage of Materials Management

Department services by the Machining and Assembly Departments, and $($c$)$

variable costs are allocated using the budgeted variable$-$cost rate and actual

usage.

Rate per item:

Requirement $2.$ Using the dual$-$rate method, compute the amount allocate costs and practical capacity of the Materials Management Department, $($b$)$

services by the Machining and Assembly Departments, and $($c$)$ variable co

Comment on your results in requirements $1$ and $2.$ Discuss the advantages

of the dual$-$rate method.