How do compute a predetermined overhead rate for the plant

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Reference no: EM132665028

Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer.

Xania has the following data for its two departments for the coming year:

Overhead costs (expected) $80,000 $44,000

Normal activity (machine hours)12,500 11,800

Problem 1: Compute a predetermined overhead rate for the plant as a whole based on machine hours. Round your answer to two decimal places.

Problem 2: Compute predetermined overhead rates for each department using machine hours. (Note: Round to two decimal places, if necessary.)

Reference no: EM132665028

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