Question

White Company has two departments, Cutting and Finishing.

Answer 1

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.