McMaster Fabrication has two manufacturing departments: machine operations and assembly. McMaster projected the following numbers for the most recent year.

McMaster applies machine operations overhead based on machine hours and assembly overhead based on direct labor hours. The following information reflects the actual results for the most recent year.

At the end of the year, the balance in the finished goods account was $150,000, and cost of goods sold (before any adjustments for over- or underapplied overhead) was $750,000. Finally, there was only one job in process at the end of the year—Job #C252. Its job sheet revealed the following cost numbers: direct materials = $2,000; direct labor = $6,000; direct labor hours in assembly = 250; machine hours in machine operations = 40.

Required:
a. Compute the overhead rate for each of McMaster’s production departments.
b. Compute the under- or overapplied overhead for each department.
c. McMaster prorates any underapplied or overapplied overhead among the workin- process, finished goods, and cost of goods sold accounts. Compute the ending balance in each of these accounts after proration. By how much will the net income before taxes rise or fall for theyear?

Machine hours Direct labor hours Factory overhead Machine OperationsAssembly 1,500 20,000 $300,000 7,500 10,000 $600,000 Machine hours Direct labor hours Factory overhead Machine Operatins Assembly 1,700 22,000 $275,000 12,000 11,000 $650,000