Uncle Julian's Snacks makes potato chips, corn chips, and cheese puffs using three different production lines within the same manufacturing plant. Currently, Uncle Julian uses a single plantwide overhead rate to allocate its $3,567,000 of annual manufacturing overhead. Of this amount, $1,785,000 is associated with the potato chip line, $1,032,000 with the corn chip line, and $750,000 with the cheese puff line. Uncle Julian's plant is currently running a total of 17,400 machine hours: 10,500 in the potato chip line, 3,150 in the corn chip line, and 3,750 in the cheese puff line. Uncle Julian considers machine hours to be the cost driver of MOH costs. 1. What is Uncle Julian's plantwide overhead rate? 2. Calculate the departmental overhead rates for Uncle Julian's three production lines. Round all answers to the nearest cent. 3. Which products are overcosted by the plantwide rate? Which products are undercosted by the plantwide rate? Requirement 1. What is Uncle Julian's plantwide overhead rate? Determine the formula for calculating the plantwide overhead rate, then calculate the rate. Plantwide overhead rate Requirement 2. Calculate the departmental overhead rates for Uncle Julian's three production lines. Begin by determining the formula for calculating a department's overhead rate, then calculate the overhead rates for each department. (Round your answers to the nearest cent.) Department erhead rate Potato Chips Corn Chips = Cheese Puffs - Requirement 3. Now, assume that $69,000 of fixed costs assigned to DVDs are direct fixed costs and can be avoided if the company stops selling DVDs. However, marketing has concluded that Blu-ray disc sales would be adversely affected by discontinuing the DVD line. (Retailers want to buy both from the same supplier.) Blu-ray disc production and sales would decline 5%. What should the company do? Prepare an incremental analysis. (Use parentheses or a minus sign to enter a decrease in operating income.) Movie Street Analysis of Dropping the DVD Product Line Expected decrease in revenues Expected decrease in expenses: Variable expenses Fixed expenses Total expected decrease in expenses Expected increase (decrease) in operating income Lost contribution margin on Blu-ray discs Net expected increase (decrease) in operating income Decision: Movie Street should consider This would let Movie Street its operating income