Reference no: EM133139878

Question - Ayayai Company produces one product, a putter called GO-Putter. Ayayai uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 110,000 units per year. The total budgeted overhead at normal capacity is $1,045,000 comprised of $385,000 of variable costs and $660,000 of fixed costs. Ayayai applies overhead on the basis of direct labor hours.

During the current year, Ayayai produced 74,000 putters, worked 84,600 direct labor hours, and incurred variable overhead costs of $140,600 and fixed overhead costs of $644,000.

Required - Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.