Perfect Image Ltd produces two types of computer printers, a laser model and an inkjet model, which pass L07 through two production departments, fabrication and assembly. The following data relate to the year just ended:

Fabrlcatlon Assembly

Budgeted overhead $270000 $135000

Expected aceivity(in direct labour hours) 22500 90000

Expected aceivity(in machine hours) 45000 12375

Actual overhend costs for the yenr were $450 000

Laser InkJet

Units produced 11250 112500

Prirne costs (material and labour) 90000 675000

Direct labour hours used:

Fabrication 1500 21000

Assembly 30000 72000

Machine hours used:

Fabrication 15000 30000

Assembly 1500 12000

Q:

1. Calculate the predeterm ined plantwide overhead rate based on direct labour hours.

2. Calculate the per unit cost of the laser and inkjet printers, based on a plantwide overhead rate assuming that direct labour hours is the cost driver.

3. Calculate predetermined departmental overhead rates, assuming that machine hours is the cost driver in fabrication nd direct labour hours is the cost driver in assembly.

4. Calculate the per unit cost of the laser and inkjet printers, based on the departmental overhead rates.

5. Estimate the amount of underapplied or overapplied overhead using: (a) a plantwide overhead rate (b) depa mental overhead rates.

6. Which approach is best for Perfect Image, a plantwide overhead rate or departmental overhead rates? Why?