I NEED HELP WITH REQUIREMENT 2: Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Harry Whipple, the plant manager, has heard that departmental overhead rates can offer significantly better cost assignments than can a plantwide rate. Mariposa has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) $528,000 $132,000 Normal activity (machine hours) 110,000 55,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. $fill in the blank 1 per machine hour 4 2. Compute predetermined overhead rates for each department using machine hours. Round your answers to one decimal place. Department A 4.8 Department B 2.4 3. Suppose that a machine tool (Product X75) used 60 machine hours from Department A and 140 machine hours from Department B. A second machine tool (Product Y15) used 140 machine hours from Department A and 60 machine hours from Department B. Compute the overhead cost assigned to each product using the plantwide rate computed in Requirement 1. Product X75 Product Y15 Plantwide: 800 800 Repeat the computation using the departmental rates found in Requirement 2. Product X75 Product

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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I NEED HELP WITH REQUIREMENT 2:

Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Harry Whipple, the plant manager, has heard that departmental overhead rates can offer significantly better cost assignments than can a plantwide rate.

Mariposa has the following data for its two departments for the coming year:

	Department A	Department B
Overhead costs (expected)	$528,000	$132,000
Normal activity (machine hours)	110,000	55,000

Required:

1. Compute a predetermined overhead rate for the plant as a whole based on machine hours.
$fill in the blank 1 per machine hour

2. Compute predetermined overhead rates for each department using machine hours. Round your answers to one decimal place.

Department A	4.8
Department B	2.4

3. Suppose that a machine tool (Product X75) used 60 machine hours from Department A and 140 machine hours from Department B. A second machine tool (Product Y15) used 140 machine hours from Department A and 60 machine hours from Department B. Compute the overhead cost assigned to each product using the plantwide rate computed in Requirement 1.

	Product X75	Product Y15
Plantwide:	800	800

Repeat the computation using the departmental rates found in Requirement 2.

	Product X75	Product Y15
Departmental:	$fill in the blank 6	$fill in the blank 7

Which of the two approaches gives the fairest assignment?

4. Repeat Requirement 3 assuming the expected overhead cost for Department B is $264,000.

	Product X75	Product Y15
Plantwide:	$fill in the blank 9	$fill in the blank 10
Departmental:	$fill in the blank 11	$fill in the blank 12

Would you recommend departmental rates over a plantwide rate?

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