Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor...

Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine-hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates:

	Dept. A	Dept. B
Direct labor cost	$56,000	$33,000
Factory overhead	$67,200	$45,000
Direct labor-hours	8,000	9,000
Machine-hours	4,000	15,000

What predetermined overhead rate would be used in Department A and Department B, respectively?

A- 83% and $5.

B- 83% and $3.

C- 120% and $3.

D- 120% and $5.

Expert Solution

Predetermined OH rate in

Dept A	Factory OH	Dept B	Factory OH
	D.Labor cost		Machine Hours

=	$ 67,200.00	=	$ 45,000.00
	$ 56,000.00		15000

=	120%	=	$ 3.00

Therefore, the answer is C

ekkarill92 answered 2 years ago

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