You are the Manager in HR Consulting Inc. One of your customers', Alice,needs your advicewith regards to their newly established manufacturing operations. GLOWis a newly established company that specializes in producing and selling specialized under water lights for pools and SPAs.

"My divisional managers are at odds with my financial controller with regards to our costing structure" Alice said while sipping her coffee. Initially the accounts department used a "normal" job-order costing system. "I really have no idea what that means" Alice added.

Currently, GLOW is using a plantwide overhead rate based on direct labor. This is the essence of the dispute . The HR manager along with the department managers are saying the " Departmental overhead rates" are better.

As Alice was leaving she gave me the following information with regards to GLOW

Pools Department SPAs Department

Expected overhead cost $75,000 $33,000

Expected direct labor hours 30,000 Hrs 24,000 Hrs

repare a report to Alice which include the following :

1. Explain what is meant by normal costing3 Marks
2. Explanation of the difference between plantwide and departmental overhead application5Marks
3. Calculate the Plant wide Overhead Rate up to decimal places where applicable2 Marks
4. Calculate the departmental Overhead Rate up to decimal places where applicable3 Marks
5. Assuming that some jobs spend most of their time in Pools Department, while others spend most of their time in SPAs Department, provide a recommendation for Alice. Justify your recommendation.7Marks