Southwick Products manufactures its products in two separate departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $1,050,000. Of this amount, the Machining Department incurs $ 650,000 (primarily for machine operation and depreciation) while the Assembly Department incurs $400,000. The company estimates that it will incur 5,000 machine hours (all in the Machining Department) and 10,000 direct labor hours (2,000 in the Machining Department and 8,000 in the Assembly Department) during the year. Southwick Products currently uses a plantwide overhead rate based on direct labor hours to allocate overhead. However, the company is considering refining its overhead allocation system by using departmental overhead rates. The Machining Department would allocate its overhead using machine hours (MH), but the Assembly Department would allocate its overhead using direct labor (DL) hours. The following chart shows the machine hours (MH) and direct labor (DL) hours incurred by Jobs 500 and 501 in each production department:

Machining Department Assembly Department

Job 500….10 MH 15 DL hours
2 DL hours

Job 501…..20 MH
2 DL hours 15 DL hours

Both Jobs 500 and 501 used $1 ,000 of direct materials. Wages and benefits total $30 per direct labor hour. Southwick Products prices its products at 120% of total manufacturing costs.

Requirement:
a. Compute the company's current plantwide overhead rate.
b. Compute refined departmental overhead rates.