Question

finish the following requirements given the below information

Score: 0 of 5 pts 1 of 6 (0 complete) HW Score: 0%, 0 of 30 pts E4-19A (similar to) Question Help Allen's Fine Furnishings manufactures upscale custom furniture. Allen's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,290,000 of manufacturing overhead to individual jobs. However, Dana Edwards, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $870,000 of manufacturing overhead while the Finishing Department incurs $420,000 of manufacturing overhead. Dana has identified machine hours (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor (DL) hours as the primary cost driver in the Finishing Department. (Click the icon to view the job information.) Read the requirements Requirement 1. Compute the plantwide overhead rate assuming that Allen's expects to incur 30.000 total DL hours during the year. First identify the formula, then compute the rate. (Round your answer to the nearest whole dollar.) - Plantwide overhead rate 0 Requirements - X More Info 1. Compute the plantwide overhead rate assuming that Allen's expects to incur 30.000 total DL hours during the year. 2. Compute departmental overhead rates assuming that Allen's expects to incur 14,500 MH in the Machining Department and 17.500 DL hours in the Finishing Department during the year. 3. If Allen's continues to use the plantwide overhead rate, how much manufacturing overhead would be allocated to Job 450 and Job 455? 4. If Allen's uses departmental overhead rates, how much manufacturing overhead would be allocated to Job 450 and Job 455? 5. Based on your answers to Requirements 3 and 4, does the plantwide overhead rate overcost or undercost either job? Explain. If Allen's sells its furniture at 125% of cost, will its choice of allocation systems affect product pricing? Explain. The Allen's plant completed Jobs 450 and 455 on May 15. Both jobs incurred a total of 5 DL hours throughout the entire production process. Job 450 incurred 2 MH in the Machining Department and 4 DL hours in the Finishing Department (the other DL hour occurred in the Machining Department). Job 455 incurred 5 MH in the Machining Department and 3 DL hours in the Finishing Department (the other two DL hours occurred in the Machining Department). Print Done Print Print Done Choose from any drop-down list and then click Check Answer. & parts O remaining Clear All Check Answer

Answer 1

1. Plantwide Overhead rate = $1290000 / 30000 = $43 per labor hour

2.

Activity	Cost	Cost Driver		Cost per Cost driver
Machining Department	$       870,000	14500	Machine hours	$            60.00	per machine hour
Finishing Department	$       420,000	17500	Labor hours	$            24.00	per labor hour
Total	$   1,290,000

3.
Overhead Allocation
Job 450 = 5 x $43 = $215
Job 455 = 5 x $43 = $215

4.
Overhead Allocation
Job 450 = 2 x $60 + 4 x $24 = $216
Job 455 = 5 x $60 + 3 x $24 = $372

5.
Plantwide overhead rate undercost both the jobs, with huge difference in Job 455 which is clearly shown in part 3 & 4.

Yes choice will matter, since if overhead is allocated as per departmental rates, selling price for Job 455 should be lot higher