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Questions

Acme Cоmpаny mаnufаctures twо prоducts, Gadgets and Widgets, and has two production departments, Y and Z. Acme uses a plantwide rate based on machine hours (MHs) to apply overhead. For the current year, Acme estimates total manufacturing overhead costs of $633,600 and total MHs of 17,600. Acme plans to switch to departmental rates based on MHs for Department Y and direct labor hours (DLHs) for Department Z. Here are estimated overhead data for the current year: It takes a total of 21 MHs (both departments) to produce one Gadget. How much lower will the per-unit manufacturing cost of one Gadget be if the cost is computed using departmental overhead rates rather than a plantwide overhead rate?