Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates regarding overhead, which are as follows: If Division A allocates overhead on the basis of machine hours and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

Job Order Costing

An accounting method used to track the costs associated with producing a specific batch of products or performing a specific job.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a selected cost driver.

Direct Labor Costs

Direct labor costs are the total expenses that a company incurs for labor directly involved in the manufacturing process of its products, including wages and salaries of the production staff.