Question list

Question $1$

Bergeron's Fine Furnishings manufactures upscale custom furniture. Bergeron's currently uses a plantwide overhead rate based on direct labor hours to allocate its $$1,290,000$ of manufacturing

overhead to individual jobs. However, Dede Fuller, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining

Department incurs $$870,000$ of manufacturing overhead while the Finishing Department incurs $$420,000$ of manufacturing overhead. Fuller has identified machine hours $($MH$)$ as the primary

manufacturing overhead cost driver in the Machining Department and direct labor $($DL$)$ hours as the primary cost driver in the Finishing Department.

View the job information.

Read the requirements.

Question $2$

Question $3$

Requirement $1.$ Compute the plantwide overhead rate assuming that Bergeron's expects to incur $30,000$ total DL hours during the year.

Question $4$

First identify the formula, then compute the rate. $($Round your answer to the nearest whole dollar.$)$

Job information

The Bergeron's plant completed Jobs $450$ and $455$ on May $15.$ Both jobs

incurred a total of $7$ DL hours throughout the entire production process. Job $450$

incurred $2$ MH in the Machining Department and $6$ DL hours in the Finishing

Department $($the other DL hour occurred in the Machining Department$).$ Job $455$

incurred $5$ MH in the Machining Department and $5$ DL hours in the Finishing

Department $($the other two DL hours occurred in the Machining Department$).$

Requirements

Compute the plantwide overhead rate assuming that Bergeron's expects to incur $30,000$ total DL

hours during the year.

Compute departmental overhead rates assuming that Bergeron's expects to incur $14,500MH$ in

the Machining Department and $17,500$ DL hours in the Finishing Department during the year.

If Bergeron's continues to use the plantwide overhead rate, how much manufacturing overhead

would be allocated to Job $450$ and Job $455?$

If Bergeron's uses departmental overhead rates, how much manufacturing overhead would be

allocated to Job $450$ and Job $455?$

Based on your answers to Requirements $3$ and $4,$ does the plantwide overhead rate overcost or

undercost either job? Explain. If Bergeron's sells its furniture at $125\%$ of cost$,$ will its choice of

allocation systems affect product pricing? Explain.