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

Department A

Department B

Direct labour cost

$$28,000$

$$49,000$

Manufacturing overhead

$$70,000$

$$40,000$

Direct labour hours

$6,000$

$8,000$

Machine hours

$2,000$

$8,000$

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

Question $11$Answer

a$.$

$82\%$ and $$2\mathrm{.}50$

b$.$

$40\%$ and $$5\mathrm{.}00$

c$.$

$250\%$ and $$2\mathrm{.}50$

d$.$

$250\%$ and $$5\mathrm{.}00$