Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates regarding overhead, which are as follows:
If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

Question

Technics Inc., a manufacturing company, utilizes job order costing.  Each division establishes its own estimates regarding overhead, which are as follows:  
If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

Quizplus · Accepted Answer

The Answer of Technics Inc., a manufacturing company, utilizes job order costing.  Each division establishes its own estimates regarding overhead, which are as follows:  
If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?