Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor-cost basis in Department A and on a machine-hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates: Dept. A Dept. B Direct labor cost $ 57,000 $ 34,000 Factory overhead $ 71,250 $ 46,055 Direct labor-hours 8,100 9,100 Machine-hours 4,100 15,100 What predetermined overhead rate would be used in Department A and Department B, respectively?

Instructions are listed below

Explanation:

Giving the following information:

Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor-cost basis in Department A and on a machine-hours basis in Department B.

Dept. A

Factory overhead $ 71,250

Direct labor-hours 8,100

Dept. B

Factory overhead $46,055

Machine-hours 15,100

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

Dept A:

Estimated manufacturing overhead rate = 71250/8100 = $8.80 per direct labor hour

Dept B:

Estimated manufacturing overhead rate = 46055/15100 = $3.05 per direct machine hour