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Upon review of the Company's operations you find that it has two departments, assembly and machine shop. Analyzing the overhead accounts, you find...
Upon review of the Company's operations you find that it has two departments, assembly and machine shop. Analyzing the overhead accounts, you find the following situation:
Department Projected Overhead Costs Projected Direct Labor
Assembly $1,800,000 165,000
Machine Shop $2,000,000 50,000
1. If a department rate were used, what amount of overhead would be allocated to the proposed contract ________________? Plant-wide rate____________?
2. What rate should the buyer use? Plant-wide rate _____________ Department rate_______________
3. Would there be any limitations on using either rate?
