Question

Harrington Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine-hours in the Machining Department and direct labor cost in the Assembly Department. At the beginning of the year, the company made the following estimates: Machining Assembly Direct labor hours 16,000 12,000 Direct labor cost$20,000 $15,000 Machine-hours5,000 1,000 Manufacturing overhead$25,000 $30,000 What predetermined overhead rates would be used in the Machining and Assembly Departments, respectively

Answer 1

Answer and Explanation:

The computation of the predetermined overhead rate for both the departments is shown below:

Predetermined overhead Rates for Machining Department

= $25,000 ÷ 5,000

= $5 per machine hour

And, Predetermined overhead Rates for Assembly Department

= $30,000 ÷ 15,000

= 200% of direct labor cost

Hence, the two are the above answers and the same is to be considered