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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