Question
Tiff Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production
Tiff Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Departments predetermined overhead rate is based on machine-hours and the Assembly Departments predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Casting Assembly Machine-hours 17,000 10,000 Direct labor-hours 1,000 5,000 Total fixed manufacturing overhead cost $ 129,200 $ 46,500 Variable manufacturing overhead per machine-hour $ 1.80 Variable manufacturing overhead per direct labor-hour $ 3.80 During the current month the company started and finished Job P131. The following data were recorded for this job: Job P131: Casting Assembly Machine-hours 90 20 Direct labor-hours 20 60 The predetermined overhead rate for the Casting Department is closest to:
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