- The difference is $13300 – $8760 = $ 4540
The difference is caused by under costing and over costing of overheads in departments. Fabricating department was $ 1.75 which was $0.35 more than $ 1.4.machining department was $ 4, $ 2.6 more than $ 1.4.the most considerable difference was caused y assembly department of $ 0.3 which was $ 1.1 less.
The difference may also be due to the coopers producing different products, using diverse workers who have other skills, hence are compensated more. In large organizations, departmental overhead costs are preferred to plant-wide because it computes rates for every department separately.