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The Collins Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A

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

Dept.A Dept.B

Direct Labor Cost$65,000$42,000

Manufacturing overhead91,00048,000

Direct labor hours8,000 10,000

Machine hours3,00012,000

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

A. 71% and $4.00

B. 140% and $4.00

C. 71% and $4.80

D. 140% and $4.80

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