ILLINOIS CORPORATION

.. produces two products and uses a predetermined overhead rate to apply overhead. The company currently applies overhead using a plantwide rate based on direct labor hours. Consideration is being given to the use of departmental overhead rates where overhead would be applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in Department 2. At the beginning of the year, the following estimates are provided:

Required:

1. Compute the plantwide predetermined overhead rate and calculate the overhead assigned to each product.
2. Calculate the predetermined departmental overhead rates and calculate the overhead assigned to each product.
3. What was the impact of the company using the blanket rate versus departmental rates? Were certain products overcosted or undercosted? Explain.
4. Compute the applied overhead for the year and the amount of mis-applied overhead for the firm using:

1. A blended rate
2. A departmental rate