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
Required:
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

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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
Required:
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?