The Crater Company Uses Predetermined Overhead Rates to Apply Manufacturing

question 131

Multiple Choice

The Crater Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and machine-hours in Dept. B. At the beginning of the year, the company made the following estimates:
$\begin{array}{lrr}&\text { Dept A }&\text { Dept B}\\\text { Direct labor cost } & \$ 65,000 & \$ 42,000 \\\text { Manufacturing overhead } & \$ 91,000 & \$ 48,000 \\\text { Direct labor-hours } & 8,000 & 10,000 \\\text { Machine-hours } & 3,000 & 12,000\end{array}$

What predetermined overhead rates would be used in Dept A and Dept B, respectively?

• A) 71% and $4.00.
• B) 140% and $4.00.
• C) 140% and $4.80.
• D) 71% and $4.80.

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