Compute a predetermined overhead rate for the plant

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Reference no: EM132509687

verhead Applied to Jobs, Departmental Overhead Rates

Xania Inc. uses a normal job-order costing system. Currently, a plant-wide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plant-wide rate can offer.

Xania has the following data for its two departments for the coming year:

                                                             Department A                        Department B

Overhead costs (expected)              $120,000                            $53,000

Normal activity (machine hours)            15,500                               9,800

Required:

Question 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. Round your answer to two decimal places.

Question 2. Compute predetermined overhead rates for each department using machine hours. (Note: Round to two decimal places, if necessary.)

Reference no: EM132509687

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