Upon review of the Company's operations you find that it has two departments, assembly and machine shop. Analyzing the overhead accounts, you find the following situation:

Department Projected Overhead Costs Projected Direct Labor

Assembly $1,800,000 165,000

Machine Shop $2,000,000 50,000

1.If a department rate were used, what amount of overhead would be allocated to the proposed contract ________________? Plant-wide rate____________?

2. What rateshould the buyer use? Plant-wide rate _____________ Department rate_______________

3. Would there be any limitations on using either rate?