Question

In: Accounting

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.

Solutions

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


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