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Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor-cost basis in Department A and on a machine-hours basis
Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor-cost basis in Department A and on a machine-hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates:
Dept. A | Dept. B | ||||||
Direct labor cost | $ | 56,000 | $ | 33,000 | |||
Factory overhead | $ | 67,200 | $ | 45,000 | |||
Direct labor-hours | 8,000 | 9,000 | |||||
Machine-hours | 4,000 | 15,000 | |||||
What predetermined overhead rate would be used in Department A and Department B, respectively?
Multiple Choice
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83% and $5.
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83% and $3.
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120% and $3.
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120% and $5.
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