Technics Inc.,a manufacturing company,utilizes job order costing.Each division establishes its own estimates regarding overhead,which are as follows:

Division A Division B
Total estimated overhead $128,000 $261,000
Total estimated machine hours 16,000 72,500
Total estimated direct labor costs $155,000 $290,000
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:
​
Division A Division B
Total estimated overhead $128,000 $261,000
Total estimated machine hours 16,000 72,500
Total estimated direct labor costs $155,000 $290,000
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:
​
Division A Division B
Total estimated overhead $128,000 $261,000
Total estimated machine hours 16,000 72,500
Total estimated direct labor costs $155,000 $290,000
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?