Hi there,

could you please assist with this problem -

Scenario

Copy House Ltd produces two types of computer printers, a laser model and an inkjet model, which pass through two production departments, Production and Assembly. The following data relate to the year just ended:

Budget information: Production Assembly

Budgeted overhead $270 000 $135 000

Expected activity 22 500 90 000

(in direct labour hours)

Expected activity 45 000 12 375

(in machine hours)

Actual Information: Laser Inkjet

Units produced 11 250 112 500

Prime costs $90 000 $675 000

Direct labour hours used:

Production 1 500 21 000

Assembly 30 000 72 000

Machine hours used:

Production 15 000 30 000

Assembly 1 500 12 000

Note: Actual overhead costs for the year were $450,000.

Required:

• Calculate the predetermined plantwide overhead rate based on direct labour hours.
• Calculate the per unit cost of the laser and inkjet printers, based on a plantwide overhead rate assuming that direct labour hours is the cost driver.
• Calculate the predetermined departmental overhead rates, assuming that machine hours is the cost driver in production and direct labour hours is the cost driver in assembly.
• Calculate the cost per units of the laser and inkjet printers, based on the departmental overhead rates.
• Estimate the amount of underapplied or overapplied overhead using:
• Plantwide overhead rate.
• Departmental overhead rates.
• Which approach is best for Copy House Ltd: a plantwide overhead rate or departmental overhead rates? Why?