Question
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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