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The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the company made the following estimates:

Dept A Dept B

Direct labor cost.................$30,000 $40,000
Manufacturing overhead............$60,000 $50,000
direct labor hours................ 6,000 8,000
machine hours..................... 2,000 10,000

What predetermined overhead rates would be used in Dept A and Dept B, respectively?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9450280

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