The Bondi Company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in Department A and on a machine hour basis in Department B. At the beginning of the year, the company made the following estimates: Dept. A Dept. B Direct labor cost $ 62,000 $ 42,000 Factory overhead $ 95,480 $ 47,120 Direct labor hours 6,200 9,200 Machine hours 2,200 15,200 What predetermined overhead rate would be used in Department A and Department B, respectively?

Instructions are listed below

Explanation:

Giving the following information:

The Bondi Company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in Department A and on a machine hour basis in Department B.

Dept. A

Factory overhead $ 95,480

Direct labor hours 6,200

Dept. B

Factory overhead $ 47,120

Machine hours 15,200

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Dept A:

Estimated manufacturing overhead rate = 95480/6200 = $15.4 per direct labor hour

Dept B:

Estimated manufacturing overhead rate = 47120/15200 = $3.1 per machine hour