Harrison's Fine Furnishings manufactures upscale custom furniture. Harrison's currently uses a plantwide overhead rate based on direct labor hours to allocate its $ 1,170,000 of manufacturing overhead to individual jobs. However, Dana Donaldson, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $ 735,000 of manufacturing overhead while the Finishing Department incurs $435,000 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.
Requried:
a. Compute the plantwide overhead rate assuming that Harrison's expects to incur 26,000 total DL hours during the year.
b. Compute departmental overhead rates assuming that Jameson's expects to incur 15,000 MH in the Machining Department and 17,400 DL hours in t Finishing Department during the year.
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Harrison's Fine Furnishings manufactures upscale custom furniture. Harrison's currently uses a plant...
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