Question
Yonge Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated based on machine hours in the
Yonge Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated based on machine hours in the Machining Department and based on direct labor hours in the Assembly Department. At the beginning of 2020, the following estimates were provided for the coming year:
Machining | Assembly | |
Direct labor cost | $500,000 | $900,000 |
Manufacturing overhead costs | $420,000 | $240,000 |
Direct labor-hours | 30,000 | 60,000 |
Machine-hours | 80,000 | 20,000 |
For the Machining Department, what is the manufacturing overhead cost driver rate?
$4.20 per machine hour
$5.25 per machine hour
$4.00 per machine hour
$4.67 per machine hour
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