Xania Inc. uses a normal job$-$order costing system. Currently, a plantwide overhead rate based

on machine hours is used. Xania's plant manager has heard that departmental overhead rates

can offer significantly better cost assignments than a plantwide rate can offer. Xania has the

following data for its two departments for the coming year:

Description Department A Department B

Overhead costs $($expected$)$ $$95,000$ $$84,000$

Normal activity $($machine hours$)15,0006,800$

Required:

$1$ Compute a predetermined overhead rate for the plant as a whole based on machine hours.

Round your answer to two decimal places.

$2$ Compute predetermined overhead rates for each department using machine hours.

$($Note: Round to two decimal places, if necessary.$)$

Description Overhead rate

Department A Per Machine Hour

Department B Per Machine Hour

$3$ Conceptual Connection: Job $73$ used $20$ machine hours from Department A and $50$ machine

hours from Department B$.$ Job $74$ used $50$ machine hours from Department A and $20$ machine hours

from Department B$.$ Compute the overhead cost assigned to each job using the plantwide rate

computed in Requirement $1.$ Repeat the computation using the departmental rates found in

Requirement $2.$ Round final answers to the nearest cent, if necessary.

Description Job $73$ Job $74$

Plantwide

Departmental

Which of the two approaches gives the fairer assignment?

$4$ Conceptual Connection: Repeat Requirement $3,$ assuming the expected overhead

cost for Department B is $$109,000($not $$84,000).$ Round overhead rates to the

nearest cent.

Description Job $73$ Job $74$

Plantwide

Departmental

For this company, would you recommend departmental rates over a plantwide rate?