Gaffel Company produces two types of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the more popular. The following budgeted data have been gathered for these two products:

All budgeted items have exactly occurred during the year.

Required:
1. Compute the overhead cost per unit for each product using a plantwide, direct labor hours rate.
2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for department 1 and direct labor hours for department 2. Repeat using direct labor hours for department 1 and machine hours for department 2.
3. Compute the overhead cost per unit for each product using activity-based costing.
4. Comment on the ability of departmental rates to improve the accuracy of productcosting.

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Product-Related Data Scientific Business 30,000 Units produced per year$100,000 Prime costs Direct labor hours Machine hours Production runs Inspection hours Maintenance hours 300,000 $1,000,000 400,000 200,000 60 1,200 3,600 40,000 20,000 40 800 900 Department Data Department I Department 2 Direct labor hours: Scientific calculator Business calculator 30,000 45,000 75,000 10,000 355,000 365,000 Total Machine hours: Scientific calculator Business calculator 10,000 160,000 170,000 10,000 40,000 50,000 Total Overhcad costs: Setup costs Inspection costs Power Maintenance $ 90,000 70,000 100,000 80,000 $340,000 $ 90,000 70,000 60,000 100,000 $320,000 Total