Exam 2 Practice Problems Chapter 18 Problem (worth 18 points) A company produces 4 products: w, x, Y, and Z. There are two departments in the factory: Prep and Packaging. 1. The company is considering the departmental overhead rate method of applying overhead costs. They budget that the Prep Department will incur about $550,000 overhead costs and will use machine hours to allocate overhead costs. They budget that the Packaging Department will incur about $87,000 overhead costs and will use direct labor hours to allocate overhead costs. Estimated machine hours and direct labor hour usage is below: 5Machine hours 1Direct labor hours 475 150 240 95 125 10 75-100 160 80 What amount of budgeted overhead would be applied to W, X, Y, and Z inventory in the coming period using departmental rates to apply overhead? Prep Department Packaging Department Total 2. The Director of Operations has identified 3 production activities and has budgeted the cost of each activity as well as the cost drivers for each. The budgeted cost of these activities is: Procurement $180,000, Scheduling $400,000, and Handling $135,000. The budgeted usage levels for each are below: Budgeted Usage of Cost Driver Activity 150 Procurement (Purchase orders) Scheduling (Production orders) Handling (Moves) 840 610 400 7,0005,400 2,0001,600 85 225 130 100 Page 4