Tanner Bay Inc. comprises of two departments, Assembly and Packaging. The company employs a job-order costing system and calculates a predetermined overhead rate in each department. The Assembly Department bases its rate on machine hrs and the Packaging Department bases its rate on direct labor hours. At the starting of the year, the company made the given estimates:
Assembly Packaging
Direct Labor-hours 3,000 4,000
Machine-hours 8,500 9,900
Manufacturing Overhead $144,500 $172,000
Direct labor cost $89,200 $101,000
Suppose that also the given actual data on Job #503 which was started and completed throughout the year:
Assembly Packaging
Direct Labor-hours 23 37
Machine-hours 109 142
Manufacturing Overhead $8,787 $6,566
Direct labor cost $2,100 $1,990
Find out the predetermined overhead rate to be employed in each department? Show calculations.