Mason Company has two manufacturing departments-Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B:

Required:
1. If Mason Company uses a plant wide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B?
2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B?
3. If Mason multiplies its job costs by a markup percentage to establish selling prices, how might plant wide overhead allocation adversely affect the company's pricing decisions?

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Estimated Data Machining Assembly Total Manufacturing overhead Direct labor-hours Machine-hours $500,000 $100,000 $600,000 60,000 55,000 10,000 50,000 50,000 5,000 Job A Machining Assembly Total 10 Direct labor-hours Machine-hours 5 2 Machining Assembly Total Job B Direct labor-hours Machine-hours 4 12 5 9