Nalters Products manufactures its products in two separate departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $1,100,000. Of this amount, the Machining Department incurs $680,000 (primarily for machine operation and depreciation) while the Assembly Department incurs $420,000. The company estimates that it will incur 10,000 machine hours (all in the Machining Department) and 22,000 direct labor hours (8,000 in the Machining Department and 14,000 in the Assembly Department) during the year. (Click the icon to view the additional information.) Read the requirements. Data table Walters Products currently uses a plantwide overhead rate based on direct labor hours to allocate overhead. However, the company is considering refining its overhead allocation system by using departmental overhead rates. The Machining Department would allocate its overhead using machine hours (MH), but the Assembly Department would allocate its overhead using direct labor (DL) hours. The following chart shows the machine hours (MH) and direct labor (DL) hours incurred by Jobs 500 and 501 in each production department: al overhead rate per mach hour per DL hour Both Jobs 500 and 501 used $1,800 of direct materials. Wages and benefits total $30 per direct labor hour. Walters Products prices its products at 110% of total manufacturing costs. \begin{tabular}{rrr} \hline & ]= & Plantwide overhead rate \\ & ]= & per DL hour \end{tabular} Requirement 2. Compute refined departmental overhead rates. Determining the formula, then compute the rates. (Round your answers to the nearest dollar.) Machining Assembly ===DepartmentaloverheadratepermachhourperDLhour Requirement 3. Which job (Job 500 or Job 501) uses more of the company's resources? Explain. of the company's resources. machine hours than the other job. The accounting system should show that one job actually the other. equirement 6 . Do both of the allocation systems accurately reflect the resources each job used? Explain. single plantwide overhead rate assigned of overhead to both jobs. The departmental rates assign to Job 501 than Job 500 due to the used. his seems Requirement 8 . Based on the current (plantwide) allocation system, how much profit did the company think it earned on each job? Calculate the gross profit using the current costing system. ased on the departmental overhead rates and the sales price determined in Requirement 7 , how much profit did the company really earn on each job? alculate the gross profit using the departmental rate costing system. (Use parentheses or a minus sign to show losses.) equirement 9. Compare and comment on the results you obtained in Requirements 7 and 8 . When utilizing a single rate allocation method, Walters believes that Then utilizing a refined costing method, Walters realizes that