Rivera Company manufactured two products, A and B, during April. For purposes of product costing, an overhead rate of $6.00 per direct-labor hour was used, based on budgeted annual factory overhead of $900,000 and 150,000 budgeted annual direct-labor hours, as follows:

Budgeted Overhead Budgeted Hours

Department 1 $600,000 120,000

Department 2 $300,000 30,000

$900,000 150,000

The number of labor hours required to manufacture each of these products was:

Product A Product B

In Department 1 1 2

Department 2 3 1

Total 4 3

During April, production units for products A and B were 3,000 and 2,500, respectively. Required:

(1) Using a plant-wide overhead rate, what are total overhead costs assigned to products A and B, respectively?

(2) Using departmental overhead rates, what are total overhead costs assigned to products A and B, respectively?

(3) Assume that materials and labor costs per unit of Product B are $15 and that the selling price is established by adding 40% of total product costs to cover profit and selling and administrative expenses. What difference in selling price would result from the use of departmental overhead rates?