The Watts Company Uses Predetermined Overhead Rates to Apply Manufacturing

question 17

Multiple Choice

The Watts Company uses predetermined overhead rates to apply manufacturing overhea? to jobs. The predetermined overhead rate is based on labour cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates: $$\begin{array} { | l | l | l | } \hline & \text { Dept } A & \text { Dept } B \\\hline \text { Direct labour cost } & \$ 30,000 & \$ 40,000 \\\hline \text { Manufacturing overhead } & 60,000 & 50,000 \\\hline \text { Direct labour hours } & 6,000 & 8,000 \\\hline \text { Machine hours } & 2,000 & 10,000 \\\hline\end{array}$$ What predetermined overhead rates would be used in Dept A and Dept B, respectively?

• A)110% and $15.00.
• B)50% and $8.00.
• C)50% and $5.00.
• D)200% and $5.00.