The following data relate to Noosa Supply Company for the year ended 31 December 2019:

Budgeted sales revenue RM 205,000

Actual manufacturing overhead RM 340,000

Budgeted machine hours 10,000

Budgeted direct labour hours 20,000

Budgeted direct labour rate RM 14

Budgeted manufacturing overhead RM364,000

Actual machine hours 11,000

Actual direct labour hours 18,000

Actual direct labour rate RM 15

Required:

1.Calculate the firm's predetermined and actual overhead rates for the year 2019 using each of the following cost drivers:

a.Machine hours

b.Direct labour cost

2.Would you recommend using an actual overhead rate or predetermined overhead rate for Noosa Supply Company? Explain your answer.