The Watts Company Uses Predetermined Overhead Rates to Apply Manufacturing

question 5

Multiple Choice

The Watts Company uses predetermined overhead rates to apply manufacturing overhead 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: What predetermined overhead rates would be used in Dept A and Dept B,respectively?

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

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Definitions:

Predictable Variability

Variations in demand or supply that can be forecasted with a degree of accuracy based on historical data or patterns.

Common Components

These are parts or materials used in the manufacturing of multiple different products, helping to reduce inventory costs and simplify production processes.

Dual Facilities

refers to a strategy where a company operates two or more facilities, typically manufacturing plants or distribution centers, in different locations to better serve various markets or to enhance production capabilities.

Stable Output

The consistent production level of goods or services over a period, unaffected by fluctuations in demand.