Gabriel Company Uses the Department Approach for Allocating Overhead What Is the Allocation Rate for Each Department (Round to Department

question 40

Multiple Choice

Gabriel Company uses the department approach for allocating overhead.The Assembly Department uses direct labor hours as its allocation base and the Grinding Department uses machine hours as its allocation base.The data for each is as follows:
$\begin{array}{lcc}&\text { Estimated Cost Pool}&\text { Allocation base}\\\text { Assembly Department } & \$ 800,000 & 100,000 \text { direct labor hours } \\\text { Grinding Department } & \$ 300,000 & 5,000 \text { machine hours }\end{array}$

What is the allocation rate for each Department (round to the nearest cent) ?

• A)Assembly = $11.00 per direct labor hour;Grinding = $220.00 per machine hour.
• B)Assembly = $0.13 per direct labor hour;Grinding = $0.02 per machine hour.
• C)Assembly = $8.00 per direct labor hour;Grinding = $60.00 per machine hour.
• D)Assembly = $10.48 per direct labor hour;Grinding = $10.48 per machine hour.
• E)None of the answer choices is correct.

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Definitions:

Linear Regression Equation

A mathematical expression defining a direct relationship between a single dependent variable and several independent variables.

Best Fit

A line or curve that represents the best approximation of a set of data points, often determined by minimizing the differences between the estimated and observed values.

Variables

Elements, features, or factors that are liable to vary or change within the context of a scientific study or experiment.

Regression Coefficient

A value that represents the degree of change in the dependent variable for a one-unit change in the independent variable in a regression analysis.