In: Accounting
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.
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