Assignment task: Facey Company has three types of lawnmowers, electric, manual, and battery-operated lawnmowers Facey Company uses a single plantwide overhead rate to allocate its $8,000,000 of annual manufacturing overhead. Of this amount, $2,200,000 is associated with the electric lawnmowers, $3,000,000 is associated with the manual lawnmowers, and $2,800,000 is associated with the battery lawnmowers. Facey Company is currently running a total of 60,000 machine hours: 16,000 for the electric, 25,000 for the manual, and 19,000 for the battery lawnmower. Facey Company uses machine hours as the cost driver for manufacturing overhead costs.
Required:
a. Calculate the plantwide manufacturing overhead rate
b. Calculate the departmental overhead rate for each of the three departments listed
c. Which product line(s) have been overcosted by using the plantwide manufacturing overhead rate? By how much per machine hour? Which product line(s) have been undercosted by using the plantwide manufacturing overhead rate? By how much per machine hour?