Question $7(1$ point

The Clothing Company has two departments: cutting and sewing. The company uses job$-$order costing and computes a pre$-$determined overhead rate in each department. The cutting department uses labor hours as its base to calculate the rate and the sewing department uses machine hours. At the beginning of the year, the company made the following estimates:

Department

Cutting

Sewing

Machine Hours

$10,000$

$4,000$

Direct Labor Hours

$20,000$

$1,000$

Direct Labor Cost

$$300,000$

$$20,000$

Manufacturing Overhead

Cost

$$200,000$

$$100,000$Required:

a$.$ Compute the predetermined overhead rate for each department.

b$.$ Assume the rates calculated in part $1$ are in effect. The job cost sheet for job #$98,$ which was started and completed during the year, showed the following:

Department

Cutting

Sewing

Materials

Requisitioned

$$1,000$

$$100$

Machine Hours

$4$

$8$

Direct Labor Hours

$8$

$2$

Direct Labor Cost

$$120$

$$40$