The Liang Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B.
At the beginning of the year, the Corporation made the following estimates:
Dept. A Dept. B
Direct labor cost $60,000 $40,000
Manufacturing overhead $90,000 $45,000
Direct labor-hours 6,000 9,000
Machine-hours 2,000 15,000
What predetermined overhead rates would be used in Dept. A and Dept. B, respectively?
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