predetermined overhead rate
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates:
Department
Cutting Finishing
Direct labor-hours 6,000 30,000
Machine-hours 48,000 5,000
Total fixed manufacturing overhead cost $ 264,000 $ 366,000
Variable manufacturing overhead per machine-hour $ 2.00 —
Variable manufacturing overhead per direct labor-hour — $ 4.00
Required:
1.
Compute the predetermined overhead rate to be used in each department. (Round your answers to 2 decimal places.)
predetermined overhead rate