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) $750,000 $330,000 Normal activity (machine hours) 6,000 10,000 Normal activity (direct labor hours) 2,000 1,000 Required Compute a predetermined overhead rate for the plant as a whole based on machine hours 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 ) Job 73 was composed of 1,000 units it has $5,000 of prime costs and used 25 machine hours from Department A and 50 machine hours from Department B it used 30 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 40 machine hours from Department A and 15 machine hours from Department B it used 20 direct labor hours from Department A and 50 direct labor hours from Department B Compute the cost per unit from Job 73 and Job 74 using a plant wide Overhead rate then compute the cost per unit for Job 73 and Job 74 using a departmental Overhead rate Be sure to show work (hint dont 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 Using a Plantwide, if actual machine hours for the year were 17,000 hours and actual overhead costs were $1,050,000, 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 $$ over applied under applied (circle one) $$ Cost of Goods Sold increased decreased (circle one)

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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

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)	$750,000	$330,000
Normal activity (machine hours)	6,000	10,000
Normal activity (direct labor hours)	2,000	1,000

Required:

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

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.)

Job 73 was composed of 1,000 units; it has $5,000 of prime costs and used 25 machine hours from Department A and 50 machine hours from Department B; it used 30 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 40 machine hours from Department A and 15 machine hours from Department B; it used 20 direct labor hours from Department A and 50 direct labor hours from Department B. Compute the cost per unit from Job 73 and Job 74 using a plant-wide Overhead rate; then compute the cost per unit for Job 73 and Job 74 using a departmental Overhead rate. Be sure to show work (hint: dont 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

Using a Plantwide, if actual machine hours for the year were 17,000 hours and actual overhead costs were $1,050,000, 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.

$$_________________________ over-applied/under-applied (circle one)

$$_________________________ Cost of Goods Sold increased/decreased (circle one)