Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Department A Department B
Overhead costs (expected) $120,000 $80,000
Normal activity (machine hours) 16,000 5,800
A) To calculate the plantwide overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= (120,000 + 80,000) / (16,000 + 5,800)= $9.17 per machine hour
B) We need to use the same formula, but for each department:
Department A:
Estimated manufacturing overhead rate= 120,000/16,000= $7.5 per machine hour
Department B:
Estimated manufacturing overhead rate= 80,000/5,800= $13.79 per machine hour
