The Roan plant of the Texas Company has two production departments: Extrusion and
Assembly. The plant produces two products: P and Q. Cost information for the production departments
is given below:
Extrusion $360000
Assembly 750000
The following table presents activity information about the departments and products:
Extrusion Assembly Total
Direct labor hours:
P 10000 20000 30000
Q 10000 30000 40000
Total 20000 50000 70000
Machine hours:
P 5000 1000 6000
Q 15000 2000 17000
Total 20000 3000 23000
Required:
a. Compute the predetermined overhead rate for each department if Extrusion uses machine hours and Assembly uses labor hours