Requirement 1. Compute the company's current plantwide overhead rate. (Round your answer to the nearest dollar.) Begin by determining the formula, then compute the rate. Total manufacturing overhead + Total direct labor hours = Plantwide overhead rate $ 1,050,000 . 10,000 = $ 105 per DL hour Requirement 2. Compute refined departmental overhead rates. Determining the formula, then compute the rates. (Round your answers to the nearest dollar.) Total departmental overhead cost Total departmental allocation base II Departmental overhead rate 650,000 + 5,000 II 130 per mach hour Machining Assembly $ $ $ 400,000 8,000 = 50 per DL hour Requirement 3. Which job (Job 500 or Job 501) uses more of the company's resources? Explain. Job 501 uses more of the company's resources. Job 501 uses more machine hours than the other job. The accounting system should show that one job actually "costs" the company more resources than the other. Requirement 4. Compute the total amount of overhead allocated to each job if the company uses its current plantwide overhead rate. Job 500 Job 501 Total direct labor hours 12 12 105 $ $ 105 x Plantwide allocation rate $ 105 $ 105 x Plantwide allocation rate $ 1,260 $ 1,260 Overhead allocation Requirement 5. Compute the total amount of overhead allocated to each job if the company uses departmental overhead rates. Job 500 Job 501 Overhead allocation - Machining Department $ 780 $ 1,560 500 500 Overhead allocation - Assembly Department $ 1,280 $ 2,060 Total overhead allocation Requirement 6. Do both of the allocation systems accurately reflect the resources each job used? Explain. The single plantwide overhead rate assigned the same amount of overhead to both jobs. The departmental rates assign more overhead cost to Job 501 than Job 500 due to the extra machine hours used. This seems "more fair" Requirement 7. Compute the total manufacturing cost and sales price of each job using the company's current plantwide overhead rate. (Round amounts to the nearest dollar. Enter the percentage as a whole number.) Job 500 Job 501 Direct materials 1000 1000 Direct labor 240 2400 1260 1260 Manufacturing overhead Total manufacturing costs 2500 2500 10 10 Markup for pricing (%) % % Southwick Products manufactures its products in two separate departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $1,050,000. Of this amount, the Machining Department incurs $650.000 (primarily for machine operation and depreciation) while the Assembly Department incurs $400.000. The company estimates that it will incur 5.000 machine hours (all in the Machining Department) and 10,000 direct labor hours (2,000 in the Machining Department and 8,000 in the Assembly Department) during the year. (Click the icon to view the additional information) Read the requirements w Overhead allocation Requirement 5. Compute the total amount of overhead allocated to each job if the company uses departmental overhead rates. Overhead allocation - Machining Department Job 500 Job 501 $ 780 S 1,560 500 500 Overhead allocation - Assembly Department $ 1,280 S 2.060 Total overhead allocation Requirement 6. Do both of the allocation systems accurately reflect the resources each job used? Explain. used. This seems The single plantwide overhead rate assigned the same amount of overhead to both jobs. The departmental rates assign more overhead cost to Job 501 than Job 500 due to the extra machine hours "more fair" Requirement 7. Compute the total manufacturing cost and sales price of each job using the company's current plantwide overhead rate. (Round amounts to the nearest dollar. Enter the percentage as a whole number.) Job 501 Job 500 1000 Direct materials 1000 Direct labor 2400 240 1260 1260 Manufacturing overhead Total manufacturing costs Markup for pricing (%) 2500 2500 10 10 % % Sales price x Data Table Southwick 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: Machining Assembly Department Department Job 500. 6 MH 10 DL hours 2 DL hours Job 501 .... 12 MH 10 DL hours 2 DL hours Both Jobs 500 and 501 used $1,000 of direct materials. Wages and benefits total $20 per direct labor hour. Southwick Products prices its products at 110% of total manufacturing costs