Metal Fabricating has two departments that all goods pass through: machining and assembly. Estimated data on each department for 2020 were as follows:

Machining Assembly

Budgeted Overhead $600,000 $480,000

Budgeted Direct Labour Hours 10,000 24,000

Budgeted Machine Hours 50,000 10,000

Actual Overhead $524,000 $500,000

Actual Direct Labour hours 16,000 28,000

Actual Machine hours 42,000 6,000

1. Metal Fabricating currently allocates manufacturing overhead using machine hours. Compute the plant-wide overhead rates using machine hours.
2. Using plant-wide rate compute the amount of over-applied or under-applied manufacturing overhead for 2020.
3. Management is concerned it is losing some jobs due to overpricing and incurring losses on orders.The company controller advised management the company should use departmental rates. The machining department should use machine hours as the cost driver and the assembly department should use direct labour hours as the cost driver.

a. Compute the departmental overhead rates.

b. Using departmental rates compute the amount of over-applied or under-applied manufacturing overhead for each department for 2020.

c.Metal Fabricating manufactured 20 shelving units for a local auto repair shop. The cost sheetcontained the following information:

Machining Assembly

Direct materials $10,000 $8,000

Direct labour $8,000 $4,000

Machine hours 400 300

Direct labour hours 80 400

Compute the selling price for the auto repair shop if the markup is 40%

4.Why would a company use departmental rates.