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

Fabrication Assembly Total Budgeted overhead $270 000 $135 000 $405 000 Expected activity (in direct labour hours) 22 500 90 000 112 500 Expected activity (in machine hours) 45 000 12 375 57 375 Actual overhead costs for the year were $450 000.

Laser Inkjet Units produced 11 250 112 500 Prime costs (material and labour) $90 000 $675 000 Direct labour hours used: Fabrication 1 500 21 000 Assembly 30 000 72 000 Machine hours used: Fabrication 15 000 30 000 Assembly 1 500 12 000 Required: 1 Calculate the predetermined 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 and 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) Plantwide overhead rate. (b) Departmental overhead rates. 6 Which approach is best for Perfect Image: a plantwide overhead rate or departmental overhead rates? Why?