The Osborne Company has refined its allocation system by separating manufacturing overhead costs into two cost pools-one for each department. The estimated costs for the Mixing Department are $500,000 and will be allocated based on direct labor hours. The estimated direct labor hours for the year are 225,000. The estimated costs for the Packaging Department are $150,000 and will be allocated based on machine hours. The estimated machine hours for the year are 50,000. In October, the company incurred 18,000 direct labor hours in the Mixing Department and 4,000 machine hours in the Packaging Department.
Requirements
1. Compute the predetermined overhead allocation rates. Round to two decimal places.
2. Determine the total amount of overhead allocated in October.