The bondi company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in department a and on a machine hour basis in department b. at the beginning of the year, the company made the following estimates: dept. a dept. b direct labor cost $ 62,000 $ 42,000 factory overhead $ 95,480 $ 47,120 direct labor hours 6,200 9,200 machine hours 2,200 15,200 what predetermined overhead rate would be used in department a and department b, respectively?

Instructions are listed below

Explanation:

Giving the following information:

The Bondi Company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in Department A and on a machine hour basis in Department B.

Dept. A

Factory overhead $ 95,480

Direct labor hours 6,200

Dept. B  

Factory overhead $ 47,120  

Machine hours 15,200

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Dept A:

Estimated manufacturing overhead rate= 95480/6200= $15.4 per direct labor hour

Dept B:

Estimated manufacturing overhead rate= 47120/15200= $3.1 per machine hour

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

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