Romsen Manufacturing, Inc., a producer of precision machine parts, uses a predeter- mined overhead rate to apply overhead. Overhead is applied on the basis of machine hours in the Drilling Department and on the basis of direct hours in the Assembly Department. At the beginning of 2006, the following estimates are provided for the coming year:

Required

1. Compute the predetermined overhead rates for each department.

2. Compute the applied overhead for the year 2006. What is the underapplied or overapplied overhead for each department? For the firm?

3. Suppose a job used 4,000 machine hours in drilling and 1,600 direct labor hours in assembly. If the job size is 8,000 units, what is the overhead cost per unit?