Question

Powell Products manufactures its products in two separate departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $1,050,000. Of this amount, the Machining Department incurs $650,000 (primarily for machine operation and depreciation) while the Assembly Department incurs $400,000. The company estimates that it will incur 5,000 machine hours (all i the Machining Department) and 10,000 direct labor hours (2,000 in the Machining Department and 8,000 in the Assembly Department) during the year. Powell currently uses a plantwide overhead rate based on direct labor hours to allocate overhead. However, the company is considering refining its overhead allocation system by using departmental overhead rates. The Machining Department would allocate its overhead using machine hours (MH), but the Assembly Department would allocate its overhead using direct labor (DL) hours. The following chart shows the machine hours (MH) and direct labor (DL) hours incurred by Jobs 500 and 501 in each production department: (Click the icon to view the additional information.) Read the requirements. Requirement 1. Compute the company's current plantwide overhead rate. (Round your answer to the nearest dollar.) Begin by determining the formula, then compute the rate. Total manufacturing overhead Total direct labor hours Plantwide overhead rate 1050000 10000 105 per DL hour Requirement 2. Compute refined departmental overhead rates. Determining the formula, then compute the rates. (Round your answers to the nearest dollar.) = Departmental overhead rate Total departmental overhead cost 650000 400000 Wages and benefits per hour 5000 Machining 130 per mach hour 40 per DL hour Assembly 10000 Requirement 3. Which job (Job 500 or Job 501) uses more of the company's resources? Explain. Job 501 uses more of the company's resources. Job 501 uses more machine hours than the other job. The accounting system should show that one job actually "costs" the company more resources than the other. Requirement 4. Compute the total amount of overhead allocated to each job if the company uses its current plantwide overhead rate. Job 500 Job 501 Choose from any list or enter any number in the input fields and then continue to the next question. ?
please ignore the answers I have put so far, I think they are wrong

Answer 1

1.Predetermined Plantwide rate = Total Overheads/Total labor hours
=1050000/10,000 = $105 per labor hour
2.Rate = Departmental Overheads/Driver Machining = 650,000/5000 = $130 per machine hour
Department B = 400,000/8000 = $50 per labor hour
501 uses more
4 more machine hours, costs the company more resources
	Job 500	Job 501
Total direct labor hours	12	12
Plantwide	105.00	105.00
Overhead	1,260	1,260
	Job 500	Job 501
Machining	=130*4 = $520	1,040
Assembly	500	500
Total	1,020	1,540
Equal overheads
More to 501
extra machine hours used
Correct/fair
	Job 500	Job 501
Direct Material	1000	1000
Direct labor	240	240
Manufacturing overhead	1,260	1,260
Total manufacturing costs	2500	2500
Mark up	110%	110%
Sales Price	2,750	2,750
	Job 500	Job 501
Sales Price	2750	2750
Total manufacturing costs	2500	2500
Gross Profit	250	250
	Job 500		Job 501
Sales Price		2750		2750
Less: Costs
Direct Material	1000		1000
Direct labor	240		240
Manufacturing overhead	1,020	2260	1,540	2,780
Gross Profit		490		-30
Believes that it earns
Realises that loses money on 501