Assume that you are the owner of a factory that produces toys. The manufacturing process of toys goes through two departments- Molding and Finishing. The Molding department is more machine intensive whereas the Finishing department is more labor intensive. The budgeted and actual data for the current month are given below. Page 3 of 3 Southeast University (Fall 2021] Labor Hours Machine Hours Manufacturin g Overhead Cost 5000 65,000 70,000 40,000 7000 47,000 $ 350,000 $430,000 $ 780,000 Budget Molding Finishing Total Actual Molding Finishing Total 6000 50,000 56,000 50,000 8000 58,000 $ 400,000 $ 300,000 $ 700,000 Required: [Marks: 6+2+2=10] (a) Calculate the appropriate departmental overhead rates for Molding and Finishing. (b) Calculate a common factory-wide overhead rate based on machine hours. (c) As a sensible business person why do you think using departmental overhead rate will be more appropriate for your factory rather than a common factory-wide overhead rate? -END-

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