The Watts Company uses predetermined overhead rates to apply manufacturing overh

Question

The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor hours 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?

$4.87 and $2.52

$6.70 and $7.00

$17.87 and $4.50

$6.70 and $4.50

Dept. A Dept. B Manufacturing overhead $536,000 $315,000 Direct labor hours 80,000 45,000 Machine hours 30,000 70,000

Explanation / Answer

predetermined overhead rates in:

Dept A=(536000/80000)=$6.70

Dept B=(315000/70000)=$4.50

Hence the correct option is D.

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