Cranston Company Estimates the Following Overhead Costs for the Coming

Essay

Cranston Company estimates the following overhead costs for the coming year:​​ $\begin{array}{lr}\text { Equipment depreciation } & \$ 160,000 \\\text { Equipment maintenance } & 60,000 \\\text { Supervisory salaries } & 40,000 \\\text { Factory rent } & 100,000 \\\text { Total } & \mathbf{\$ 36 0 , 0 0 0} \\\end{array}$ Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year.​
(a)Calculate the predetermined overhead rate using direct labor costs as the allocation base.
(b)Calculate the predetermined overhead rate using machine hours as the allocation base.