Hudson Company operates two factories. The company applies factory overhead to j

Question

Hudson Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows:
Factory 1 Factory 2
Estimated factory overhead cost for fiscal
year beginning June 1 $835,240 $614,800
Estimated direct labor hours for year 10,600
Estimated machine hours for year 21,980
Actual factory overhead costs for June $66,600 $52,900
Actual direct labor hours for June 950
Actual machine hours for June 1,710

a. Determine the factory overhead rate for Factory 1.
$ per machine hour

b. Determine the factory overhead rate for Factory 2.
$ per direct labor hour

Explanation / Answer

$22 Machine per hour

$38 per direct labor hour

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