A company produces garden benches which go through two operations, operation 1A1 and operation 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.
$\begin{array}{lcc}&\text { Department } & \text { Department } \
&1 \mathrm{~A} 1 & 2 \mathrm{~B} 2\
\text { Machine hours } & 70,000 \mathrm{MH} & 60,000 \mathrm{MH} \
\text { Direct labor hours } & 56,350 \mathrm{DLH} & 50,160 \mathrm{DLH} \
\text { Overhead costs } & \$ 225,400 & \$ 250,800
\end{array}$

Question

A company produces garden benches which go through two operations, operation 1A1 and operation 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.
 $\begin{array}{lcc}&\text { Department } & \text { Department } \
&1 \mathrm{~A} 1 & 2 \mathrm{~B} 2\
\text { Machine hours } & 70,000 \mathrm{MH} & 60,000 \mathrm{MH} \
\text { Direct labor hours } & 56,350 \mathrm{DLH} & 50,160 \mathrm{DLH} \
\text { Overhead costs } & \$ 225,400 & \$ 250,800
\end{array}$

Quizplus · Accepted Answer

The overhead rates for department 1A1 and department 2B2 are not the same because they are based on different machine hours and overhead costs.

A Company Produces Garden Benches Which Go Through Two Operations