Valtec Company has three manufacturing divisions (listed below). Each division has its own job order costing system and forecasts the following manufacturing costs for the upcoming year:

The predetermined overhead rates for each division are based on the following:
Wayne Division: Machine hours
Monroe Division: Materials to be used
Yates Division: Direct labor hours
1. Compute the predetermined overhead rate to be used by each division.
2. If the Wayne Division actually had 37,000 machine hours and $49,000 of manufacturing overhead, will overhead be over- or under-applied and by how much?
3. If the Monroe Division used 95,000 pounds of materials, what will be the applied manufacturing overhead?
4. Interpretive Question: Of the two commonly used methods to dispose of over- or under-applied manufacturing overhead, which method would you recommend andwhy?

Division Yates Wayne 120,000 45,000 40,000 Monroe Materials to be used (lbs.) Direct labor hours Machine hours Total budgeted manufacturing overhead 80,000 25,000 15,000 100,000 25,000 $70,000 $50,000 $45,000