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The Bondi Company Uses a Predetermined Overhead Rate in Applying

question 90

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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 $60,000$40,000 Factory overhead $90,000$45,000 Direct labor hours 6,0009,000 Machine hours 2,00015,000\begin{array} { l r r } & \text { Dept. A } & \text { Dept. B } \\\text { Direct labor cost } & \$ 60,000 & \$ 40,000 \\\text { Factory overhead } & \$ 90,000 & \$ 45,000 \\\text { Direct labor hours } & 6,000 & 9,000 \\\text { Machine hours } & 2,000 & 15,000\end{array}
What predetermined overhead rate would be used in Department A and Department B, respectively?

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Definitions:

Normative

Relating to an ideal standard or model, and pertaining to rules that govern behavior within a group or society.

Empirical

Based on observation or experience rather than theory or pure logic, relating to data which can be measured or observed directly.

Diagnostic

Pertaining to or aiding in the detection and identification of a disease, condition, or distinctive characteristics.

Binge Drinking

The consumption of an excessive amount of alcohol in a short period of time, typically defined as five or more drinks for males, and four or more drinks for females, in about two hours.

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