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: Department A Department B Overhead costs (expected) $400,000 $200,000 Normal activity (machine hours) 10,000 2,000 Normal activity (direct labor hours) 4,000 2,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. 2. Compute predetermined overhead rates for each department using machine hours for Department A and direct labor hours for Department B. (Note: Carry your calculations out to the nearest dollar.) 3. Job 73 was composed of 1,000 units; it has $5,000 of prime costs and used 40 machine hours from Department A and 10 machine hours from Department B; it used 20 direct labor hours from Department A and 20 direct labor hours from Department B. Job 74 was composed of 1,200 units; it has $6,000 of prime costs and used 20 machine hours from Department A and 40 machine hours from Department B; it used 30 direct labor hours from Department A and 20 direct labor hours from Department B. Compute the cost per unit from Job 73 and Job 74 using a plant-wide Overhead rate (from #1); then compute the cost per unit

for Job 73 and Job 74 using a departmental Overhead rate (from #2). Be sure to show work (hint: don't forget when computing cost per unit to include all manufacturing costs; hint 2: find the total cost of the job under one method, and then divide by number made to find cost/unit; repeat for the different parts). Job 73 Plantwide Job 73 Departmental Job 74 Plantwide Job 74 Departmental 4. Using a Plantwide from #1, if actual machine hours for the year were 13,000 hours and actual overhead costs were $620,000, how much was overhead under- or over-applied for the year and how would that affect Cost of Goods Sold when it is closed to that account. $$_________________________(amount) over-applied/under-applied (circle one) Cost of Goods Sold increased/decreased (circle one)