Question
Moon Company has two production departments, Cutting and Painting. The Cutting Department applies manufacturing overhead based on direct labor hours which are estimated to total
Moon Company has two production departments, Cutting and Painting. The Cutting Department applies manufacturing overhead based on direct labor hours which are estimated to total 45,000 for the period. The Painting Department applies manufacturing overhead based on machine hours which are estimated to total 80,000 for the period. Information related to estimated overhead costs for each of the departments is presented below:
Cutting Department Painting Department
Total fixed manufacturing overhead $90,000 $40,000
Variable manufacturing overhead per direct labor hour $2.50
Variable manufacturing overhead per machine hour $3.00
The predetermined overhead rate the Cutting Department will use to apply manufacturing overhead to jobs is closest to:
| A. | $2.00 per direct labor hour | |
| B. | $4.50 per direct labor hour | |
| C. | $3.00 per direct labor hour | |
| D. | $2.50 per direct labor hour |
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Corporate Financial Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
12th edition
1305041399, 1285078586, 978-1-133-9524, 9781133952428, 978-1305041394, 9781285078588, 1-133-95241-0, 978-1133952411
