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    Predetermined Overhead Rate Used in Packaging & Assembly Departments

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    Need some help on this, please show all work so I can save this for the future. I am very confused with accounting practices.

    Tanner Bay Inc. has two departments, Assembly and Packaging. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Assembly Department bases its rate on machine hours and the Packaging Department bases its rate on direct labor hours. At the beginning of the year, the company made the following estimates:

    Assembly Packaging
    Direct labor hours 3,000 4,000
    Machine-hours 8,500 9,900
    Manufacturing overhead cost $144,500 $172,000
    Direct labor cost $89,200 $101,000

    Assume also the following data on Job #503 which was started and completed during the year:

    Assembly Packaging
    Direct labor hours 23 37
    Machine-hours 109 142
    Materials Requisitioned $8,787 $6,566
    Direct labor cost $2,100 $1,990

    What is the predetermined overhead rate to be used in each department? Show computations.

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    Solution Summary

    The expert examines predetermined overhead rate used in packaging and assembly departments. A company using a job-order costing systems and computes a predetermined overhead rate in each department is determined.

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