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Figure 5-3. Mitchell's Softball Gloves Company estimated the following at the beginning of the year: Assembly Department Testing Department Tota l Overhead $570,000 $130,000 $700,000

Figure 5-3. Mitchell's Softball Gloves Company estimated the following at the beginning of the year:

Assembly Department

Testing Department

Total

Overhead

$570,000

$130,000

$700,000

Direct Labor Hours

142,500 hrs.

32,500 hrs.

175,000 hrs.

Machine Hours

32,000 hrs.

65,000 hrs.

97,000 hrs.

Mitchell uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead. Machine hours are used to apply overhead in the testing department. Actual data for August is as follows:

Assembly Department

Testing Department

Total

Overhead

$42,000

$12,000

$54,000

Direct Labor Hours

13,500 hrs.

2,430 hrs.

15,930 hrs.

Machine Hours

4,020 hrs.

11,000 hrs.

15,020 hrs.

Refer to Figure 5-3. Mitchell decides to continue using departmental overhead rates. What are the predetermined rates for the Assembly and Testing departments respectively?

a.

assembly: $4 per direct labor hour; testing: $2 per machine hour

b.

assembly: $2 per direct labor hour; testing: $4 per machine hour

c.

assembly: $4 per direct labor hour; testing: $4 per direct labor hour

d.

assembly: $7.22 per machine hour; testing: $7.22 per machine hour

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