Auerbach Enterprises

1 – Departmental rates – Divide the overhead costs for each process by the machine hours for that process

2 – Company-wide rate – Divide total overhead by total machine hours

3 – A – Overhead per batch using rate in #2

B – Overhead per batch using rates in #1

4 – A – Unit costs just like 3A

B - Unit costs just like 3B

5 – A – Total costs just like 3A

B - Total costs just like 3B

6 – Should we use company-wide rates or department rates? Why? Is one method better?