Vulcan Molding has three production departments: A, B, and C. At the start of the year, the company estimated that it would incur $2,500,000 of direct labor cost and $8,000,000 of manufacturing overhead as follows:

Required
a. Calculate the overhead that would be assigned to each job assuming the company uses one plant-wide overhead allocation rate based on expected labor cost.
b. Calculate the overhead that would be assigned to each job assuming the company uses a separate overhead allocation rate for each production department based on direct labor cost.
c. Which is preferable: a single overhead rate or separate rates by production department?Explain.

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Dept. B $2,500,000 625,000 $4.00 Dept.A Dept. C Total Estimated overhead $3,500,000 Estimated direct labor $1,000,000 Overhead rate $2,000,000 $8,000,000 $1,000,000 $2,625,000 $3.50 $2.00 $3.05 Along with many others, Vulcan Molding worked on the following three jobs during the year: Direct Labor Cost Job 201 Job 202 Job 203 Dept. A $8,000 $4,000 $1,000 Dept. B $2,000 $6,000 $4,000 Dept.C $4,000 $8,000 $1,000 Total $14,000 18,000 $6,000