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Palmer Co. has two departments that all goods pass through: machining and...

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Accounting

Palmer Co. has two departments that all goods pass through: machining and assembly.
Machining overhead is applied based on machine hours, and assembly overhead is applied based
on direct labour hours.
Data on each department are as follows:
Machining Assembly
Budgeted Overhead $75,000 $40,000
Budgeted Direct Labour Hours 5,00010,000
Budgeted Machine Hours 25,0001,000
Actual Overhead $75,400 $39,200
Actual Direct Labour Hours 5,2039,980
Actual Machine Hours 25,040850
Required:
1. If the company applied overhead using a plantwide rate based on direct labour hours,
calculated the plantwide overhead rate.
2. Calculate the overhead rate for each department.
3. What is each department's applied overhead?
4. Calculate each department's overhead variance. Specify whether it is overapplied or
underapplied.

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