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Problem 3 A Corporation has two manufacturing departments (Dept 1 and Dept 2). The company used the following data at the beginning of the
Problem 3 A Corporation has two manufacturing departments (Dept 1 and Dept 2). The company used the following data at the beginning of the period to calculate a predetermined overhead rate. Dept 1 Dept 2 Total Estimated total machine-hours (MHS) 5,000 8,000 13,000 Estimated total direct labor hours (DLHS) 3,000 1,700 4,700 Estimated total fixed manufacturing $ 18,000 $ 14,000 $ 32,000 $ 5.25/MH $ 20.00/DLH overhead cost Estimated variable manufacturing overhead $9.10/MH cost per machine hour Estimated variable manufacturing overhead S 8.20/DLH cost per direct labor hour a) Assume that the company decides to use a plantwide predetermined overhead rate based on direct labor hours. Calculate the plantwide predetermined overhead rate. b) Assume that the company also calculated a plantwide predetermined overhead rate based on machine hours. Calculate the plantwide predetermined overhead rate.
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