Shakespeare Company has two departments: Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Cutting Finishing Direct labor-hours 8,100 75,000 Machine-hours 64,500 1,200 Total fixed manufacturing overhead cost $370,000 $405,000 Variable manufacturing overhead per machine-hour $3.00 - Variable manufacturing overhead per direct labor-hour - $3.75 Compute the predetermined overhead rate to be used in each department.
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