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Fab Furniture has two manufacturing departments-Cutting and Finishing. It considers all of its manuf

Fab Furniture has two manufacturing departments-Cutting and Finishing. It considers all of its manufacturing overhead costs t3. Do you recommend that Fab Furniture use a plantwide overhead rate or departmental overhead rates? Why?

Fab Furniture has two manufacturing departments-Cutting and Finishing. It considers all of its manufacturing overhead costs to be fixed costs. The overhead estimates for the year and for one job (Order #75675) completed during the year are shown below. Estimated Data Cutting $ 1,170,000 65,000 26,000 Finishing $1,430,000 39,000 130,000 Total $ 2,600,000 Manufacturing overhead costs Direct labor-hours 104,000 Machine-hours 156,000 Finishing Order # 75675 Cutting Total Direct labor-hours 6 14 20 Machine-hours 9 6 15 Required: 1. Calculate the predetermined overhead rate and the amount of manufacturing overhead applied to Order#75675 assuming Fab Furniture uses a plantwide predetermined overhead rate based on direct labor hours 2. Fab Furniture is considering using departmental predetermined overhead rates with direct labor-hours as the allocation base in Cutting and machine-hours as the allocation base in Finishing. Calculate the predetermined overhead rate for each department and the manufacturing overhead applied to Order #75675 using departmental rates. (Round your intermediate calculation to 2 decimal places.) 1. Plantwide predetermined overhead rate Plantwide manufacturing overhead applied to Order #75675 2. Cutting Department predetermined overhead rate Manufacturing overhead applied from Cutting to Order #75675 Finishing Department predetermined overhead rate Manufacturing overhead applied from Finishing to Order # 75675 Total departmental manufacturing overhead applied to Order #75675 3. Do you recommend that Fab Furniture use a plantwide overhead rate or departmental overhead rates? Why?

Apr 03 2020 View more View Less

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