The Watts Company Uses Predetermined Overhead Rates to Apply Manufacturing

question 58

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 Department A and on machine hours in Department B.At the beginning of the year,the company made the following estimates: $\begin{array}{|l|r|r|}\hline & \text { Department A } & \text { Department B } \\\hline \text { Direct labour cost } & \$ 30,000 & \$ 40,000 \\\hline \text { Manufacturing overhead } & \$ 60,000 & \$ 50,000 \\\hline \text { Direct labour hours } & 6,000 & 8,000 \\\hline \text { Machine hours } & 2,000 & 10,000 \\\hline\end{array}$ What predetermined overhead rates would be used in Departments A and B,respectively?

• A) 50% and $8.00.
• B) 50% and $5.00.
• C) 110% and $15.00.
• D) 200% and $5.00. Dept. A = $60,000/$30,000 = 200% Dept. B = $50,000/10,000m. hrs = $5/m. hr.

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Definitions:

Motor Control

The process by which the nervous system directs or influences muscles to perform voluntary movements.

Cerebellum

A region of the brain that plays an important role in motor control, coordination, precision, and timing of movements.

Basal Ganglia

A group of nuclei in the brain involved in coordinating movement, as well as aspects of learning and emotion.