Made Well Tool, Inc

Essay

Made Well Tool, Inc., a manufacturer of cutting tools, divided its manufacturing process into two
Departments - Machining and Finishing. The estimated overhead costs for the Machining and Finishing
departments amounted to $400,000 and $1,000,000, respectively. The company produces two types of tools - Standard and Deluxe. The total estimated labor hours for the year were 4,000, and total estimated machine hours were 2,000. The Machining department is mechanized, whereas the Finishing department is labor oriented. Calculate departmental predetermined overhead allocation rates.
$$\begin{array} { | l | r | r | } \hline &{ \text { Machining } } & { \text { Finishing } } \\\hline & \text { Machine hours } & \text { Labor hours } \\\hline \text { Standard } & 500 & 1,800 \\\hline \text { Deluxe } & \underline { 1,500 } & \underline { 2,200 } \\\hline & \underline { 2,000 } & \underline { 4,000 } \\\hline\end{array}$$