Reference no: EM132967926
The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labour cost in Department A and on machine hours in Department B. At the beginning of the year, the company made the following estimates:
Department A Department B
Direct labour cost $30,000 $40,000
Manufacturing overhead $60,000 $50,000
Direct labour hours 6,000 8,000
Machine hours 2,000 10,000
Problem 1: What predetermined overhead rates would be used in Departments A and B, respectively?
Select one:
a. 50% and $8.00.
b. 110% and $15.00.
c. 50% and $5.00.
d. 200% and $5.00.
Simplex Company has the following estimated costs for next year:
Direct materials $15,000
Direct labour 55,000
Sales commissions 75,000
Salary of production supervisor 35,000
Indirect materials 5,000
Advertising expenses 11,000
Rent on factory equipment 16,000
Problem 2: Simplex estimates that 10,000 direct labour and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, what will be the overhead rate per hour?
Select one:
a. $7.63.
b. $8.56.
c. $3.50.
d. $6.94.
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