Mariposa, inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. harry whipple, the plant manager, has heard that departmental overhead rates can offer significantly better cost assignments than can a plantwide rate. mariposa has the following data for its two departments for the coming year:
department a department b
overhead costs (expected) $528,000 $132,000
normal activity (machine hours) 110,000 55,000
compute a predetermined overhead rate for the plant as a whole based on machine hours.
compute predetermined overhead rates for each department using machine hours.