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Calculate the predetermined overhead rate to be used

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Stressed Out Inc. 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 labour cost. At the beginning of the year, the company made the following estimates:

Department                               Cutting                    Finishing

Direct labour-hours                    5,000                   21,000

Machine-hours                             45,000                     3,000

Manufacturing overhead cost            $382,500                   $499,500

Direct labour cost                                 $ 75,000              $270,000

Required:

Question 1: Calculate the predetermined overhead rate to be used in each department.

Reference no: EM132556514

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