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joja [24]
3 years ago
10

White Company has two departments, Cutting and Finishing.

Business
1 answer:
GaryK [48]3 years ago
7 0

Answer:

Cutting = $10.99 per machine hour

Finishing= $15.28 per direct labour hours.

Explanation:

The question requests the predetermined overhead rate for Cutting department and Finishing department

Step 1: What is the formula for the pre-determined overhead rate

For the Cutting Department

Predetermined Overhead rate= The total fixed manufacturing Overhead/ Total Machine Hours +Variable Manufacturing Overhead rate per machine hour.

= $390,000/$43,400) + $2

= $10.99 per machine hour

For the Finishing Department

Predetermined Overhead rate= The total fixed manufacturing Overhead/ Total Labour Hours +Variable Manufacturing Overhead rate per machine hour.

= $496,000/43,000) + $3.75

= $15.28 per direct labour hours.

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That is, indirect costs are those costs that the company incurs during the exercise of its activity, whose allocation is more complicated, since they are not directly related to production.

In the above case, it is shown that the environmental effect produced by the cyclone is not directly related to the production of the bricks, so it is considered that it corresponds to indirect costs of the operation.

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