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The Collins Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead...

The Collins Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor costs in Dept. A and machine hours in Dept. B. at the beginning of the year, the company made the following estimates:

Dept. A           Dept. B

Direct Labor cost………………………… $65,000           $42,000

Manufacturing overhead…………………$91,000           $48,000

Direct Labor-hours………………………8,000 hours     10,000 hours

Machine-hours………………………… 3,000 hours     12,000 hours

What is the predetermined overhead rate for department A?

What is the predetermined overhead rate for department B?

Solutions

Expert Solution

The predetermined overhead rate for department A = Manufacturing overhead /  labor costs

= $ 91,000 / $ 65,000

= 1.4

Hence the correct answer is 1.4

the predetermined overhead rate for department B =  Manufacturing overhead /  machine hours

= $ 48,000 /  12,000  hours

= $ 4 per machine hour

Hence the correct answer is$ 4 per machine hour

ekkarill92 answered 2 years ago
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