1.The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labour cost in Department A and on machine hours in Department B. At the beginning of the year, the company made the following estimates:

Department A

Department B

Direct labour cost

$120,000

$40,000

Manufacturing overhead

$60,000

$80,000

Direct labour hours

6,000

8,000

Machine hours

2,000

10,000

What predetermined overhead rates would be used in Departments A and B, respectively?

a.50% and $5.00.

b.200% and $5.00.

c.110% and $15.00.

d.50% and $8.00.

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