The Bondi Company Uses a Predetermined Overhead Rate in Applying

question 90

Multiple Choice

The Bondi Company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in Department A and on a machine hour basis in Department B. At the beginning of the year, the company made the following estimates:
$$\begin{array} { l r r } & \text { Dept. A } & \text { Dept. B } \\\text { Direct labor cost } & \$ 60,000 & \$ 40,000 \\\text { Factory overhead } & \$ 90,000 & \$ 45,000 \\\text { Direct labor hours } & 6,000 & 9,000 \\\text { Machine hours } & 2,000 & 15,000\end{array}$$
What predetermined overhead rate would be used in Department A and Department B, respectively?

• A) 150% and 300%.
• B) 150% and $3.00.
• C) $1.50 and 300%.
• D) $1.50 and $3.00.

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