Blackfoot Softball Glove Company Estimated the Following Yearly Data at the Beginning

question 140

Multiple Choice

Blackfoot Softball Glove Company estimated the following yearly data at the beginning of the year:
Blackfoot uses departmental overhead rates. In the assembly department, direct labour hours are used to apply overhead. Machine hours are used to apply overhead in the testing department.
Actual data for August are as follows:
$$\begin{array} { l r r r } & \text { Assembly Department } & \text { Testing Department } & \text { Total } \\\text { Overhead } & \$ 570,000 & \$ 130,000 & \$ 700,000 \\\text { Direct Labour Hours } & 142,500 & 32,500 & 175,000 \\\text { Machine Hours } & 32,000 & 65,000 & 97,000\end{array}$$ $\begin{array}{rrrr} & \text { Assembly Department } & \text { Testing Department } & \text { Total } \\\text { Overhead } & \$ 42,000 & \$ 12,000 & \$ 54,000\\\text { Direct Labour Hours } & 13,500 & 2,430 & 15,930 \\\text { Machine Hours } & 4,020 & 11,000 & 15,020\end{array}$
-Refer to the Figure.Suppose that instead of departmental rates,Blackfoot uses a plantwide overhead rate that is based on direct labour hours.What is the predetermined overhead rate rounded to the nearest cent?

• A)$0.52 per direct labour hour
• B)$2.57 per direct labour hour
• C)$4.00 per direct labour hour
• D)$5.00 per direct labour hour

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Definitions:

Maintenance Hangar

A facility dedicated to the maintenance, repair, and overhaul (MRO) of aircraft.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health of the company.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value, helping to determine its worth.

Intangible Benefits

Benefits that cannot be physically touched or quantified easily, such as brand reputation or customer loyalty.