Dotsero Technology, Inc. has a job-order costing system. The company uses predet

Question

Dotsero Technology, Inc. has a job-order costing system. The company uses predetermined overhead rates Iin apply manufacturing overhead cost to individual jobs. The predetermined overhead rate in department A is based on machine-hours, and the rate in department B is based on direct material cost. At the beginning of the most recent year, the company's management made the following estimates for the year:
Department A Department B
Machine-hours............................ 70,000 19,000
Direct labor-hours........................ 30,000 60,000
Direct materials cost..................... 195,000 282,000
Direct labor cost.......................... 260,000 520,000
Manufacturing overhead cost............ 420,000 705,000

Compute the predeterminded overhead rates for department A and department B.

Explanation / Answer

                                                Dept. A                Dept. B
Machine hours                          70,000
DM Cost                                                              282,000

Manufacturing overhead          420,000                705,000
Predetermined OH rate      420,000 / 70,000   705,000/282,000
                                          = 6.00 per MH           2.50 per dollar of DM cost

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.