Cardec, Inc, a leading manufacturer of car spare parts, divided its manufacturing process into two
Departments - Production and Packing
The estimated overhead costs for the Production and Packing
departments amounted to $14,000,000 and $20,000,000, respectively. The company produces two types of parts - Part 1 and Part 2. The total estimated labor hours for the year were 40,000, and estimated machine hours were 35,000. The Production department is mechanized, whereas the Packing department is labor oriented. Calculate departmental predetermined overhead allocation rates.
Production Packing
Machine hours Labor hours
Part 1 10,000 30,000
Part 2 25,000 10,000
35,000 40,000
What will be an ideal response
Production Packing
Estimated overhead cost $14,000,000 $20,000,000
Estimated machine hours 35,000
Estimated labor hours 40,000
Predetermined overhead allocation rate $400 $500
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