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White Company has two departments: cutting and finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The
White Company has two departments: cutting and finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The cutting department bases its rate on machine-hours, and the nishing department bases its rate on direct labour cost. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labourhours 6,000 34,000 Machinehours 47,500 4,000 Manufacturing overhead cost $451,250 $545,750 Direct labour cost $ 60,000 $295,000 Required: 1. Compute the predetermined overhead rate to be used in each department. (Round your answers to 2 decimal places.) % of DLC Predetermined overhead rate -m- 2. Assume that the overhead rates that you computed in Requirement (1) are in effect. The job cost sheet for job 203, which was started and completed during the year, showed the following: Department Cutting Finishing Direct labour-hours 6 20 Machine-hours 90 4 Materials requisitioned $450 $260 Direct labour cost 66 $160 Compute the total overhead cost applied to job 203. (Do not round intermediate calculations and round your answer to 2 decimal places.) Total overhead cost applied3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide overhead rate based on direct labour cost, rather than using departmental rates? /"'\\_ Yes No
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