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Departmental Overhead Rates 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) $480,000 $120,000 Normal activity (machine hours) 100,000 50,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. per machine hour 2. Compute predetermined overhead rates for each department using machine hours. Round your answers to one decimal place. Department A per machine hour Department B per machine hour 3. Suppose that a machine tool (Product X75) used 60 machine hours from Department A and 150 machine hours from Department B. A second machine tool (Product Y15) used 160 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: Repeat the computation using the departmental rates found in Requirement 2. Product X75 Product Y15 Departmental: Which of the two approaches gives the fairest assignment? 4. Repeat Requirement 3 assuming the expected overhead cost for Department B is $240,000. Product X75 Product Y15 Plantwide: Departmental: Would you recommend departmental rates over a plantwide rate

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