Voisine Products manufactures its products in two separate$$ departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $ $1$ comma $050$ comma $000$$$1,050,000.$ Of this$$ amount, the Machining Department incurs $ $650$ comma $000$$$650,000($primarily for machine operation and$$ depreciation$)$ while the Assembly Department incurs $ $400$ comma $000$$$400,000.$ The company estimates that it will incur $5$ comma $0005,000$ machine hours$($all in the Machining$$ Department$)$ and $10$ comma $00010,000$ direct labor hours $(2$ comma $0002,000$ in the Machining Department and $8$ comma $0008,000$ in the Assembly$$ Department$)$ during the year.

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Part $1$

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.

Part $2$

$-$:

$=$

Plantwide overhead rate

$-$:

$=$

per DL hour

Part $3$

Requirement $2.$ Compute refined departmental overhead rates.

Determining the$$ formula, then compute the rates. $($Round your answers to the nearest$$ dollar.$)$

$-$:

$=$

Departmental overhead rate

Part $4$

Machining

$-$:

$=$

per mach hour

Assembly

$-$:

$=$

per DL hour

Part $5$

Requirement $3.$ Which job$($Job $500$ or Job$501)$ uses more of the$$ company's resources? Explain.

$$

Job $500$ uses more

Job $501$ uses more

of the$$ company's resources.

Part $6$

$$

Job $500$ uses more

Job $501$ uses more

machine hours than the other job. The accounting system should show that one job actually

$$

"costs" the company more labor than

"costs" the company more resources than

"costs" the company the same amount of resources as

the other.

Part $7$

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

$\backslash$times Plantwide allocation rate

Overhead allocation

Part $8$

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

Overhead allocation $-$ Assembly Department

Total overhead allocation

Part $9$

Requirement $6.$ Do both of the allocation systems accurately reflect the resources each job$$ used? Explain.

The single plantwide overhead rate assigned

$$

different amounts

the same amount

of overhead to both jobs. The departmental rates assign

$$

less overhead cost

more overhead cost

to Job $501$ than Job $500$ due to the

$$

extra assembly hours

extra direct labor hours

extra machine hours

used. This seems

$$

"more fair"

"less fair"

$.$

Part $10$

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

Direct labor

Manufacturing overhead

Total manufacturing costs

Markup for pricing $(\%)$

$\%$

$\%$

Sales price

Part $11$

Requirement $8.$ Based on the current$($plantwide$)$ allocation$$ system, how much profit did the company think it earned on each$$ job?

Calculate the gross profit using the current costing system.

Job $500$

Job $501$

Sales price

Less: Total manufacturing costs

Gross profit $($loss$)$

Part $12$

Based on the departmental overhead rates and the sales price determined in Requirement$7,$ how much profit did the company really earn on each$$ job?

Calculate the gross profit using the departmental rate costing system. $($Use parentheses or a minus sign to show$$ losses.$)$

Job $500$

Job $501$

Sales price

Less: Total manufacturing costs:

Direct materials

Direct labor

Manufacturing overhead

Gross profit $($loss$)$

Part $13$

Requirement $9.$ Compare and comment on the results you obtained in Requirements $7$ and $8.$

When utilizing a single rate allocation$$ method, VoisineVoisine believes that

$$

both jobs are equally profitable

Job $500$ is profitable but Job $501$ shows a loss

Job $501$ is profitable but Job $500$ shows a loss

$.$

When utilizing a refined costing$$ method, VoisineVoisine realizes that

$$

both jobs are equally profitable

Job $500$ is profitable but Job $501$ shows a loss

Job $501$ is profitable but Job $500$ shows a loss

$.$

Explain.of the company's resources.of the company's resources.machine hours than the other job.The accounting system should show that one job actuallythe other.The single plantwide overhead rate assignedof overhead to both jobs.The departmental rates assignto Job $501$ than Job $500$ due to theto Job $501$ than Job $500$ due to theused.This seems.When utilizing a single rate allocation method, Voisine believes thatVoisineWhen utilizing a refined costing method, Voisine realizes that.