Question

Seton Hall Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Finishing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Forming Finishing Machine-hours 24,000 18,000 Direct labor-hours 4,000 6,000 Total fixed manufacturing overhead cost $118,800 $57,600 Variable manufacturing overhead per machine-hour $4.40 Variable manufacturing overhead per direct labor-hour $6.00

Answer 1

Forming rate $ 4.95 per machine hour

Finishing rate $ 9.60 per labor hours

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

The overhead rate is determined by divided the expected cost over the expected volume of the cost driver.

Then, it will e applied based on actual volume of it.

Forming cost driver: Machine Hours

$118,800 / 24,000 machine hours =

$ 4.95 predetermined overhead rate

Finishing cost driver: Labor hours

$57,600 / 6,000 labor hours =

$ 9.60 predetermined overhead rate