Reference no: EM132742863
The Bondi Company uses a predetermined overhead rate in applying overhead to production orders on a direct labor cost basis in Department A and on a machine hour basis in Department B. At the beginning of the year, the company made the following estimates:
Dept. A Dept. B
Direct labor cost $60, 000 $40, 000
Factory overhead $90, 000 $45, 000
Direct labor hours 6, 000 9, 000
Machine hours 2, 000 15, 090
Problem 1: What predetermined overhead rate would be used in Department A and Department B, respectively?
Multiple Choice
Option 1: 150% and 300%.
Option 2: 150% and $3.00.
Option 3: $1.50 and 300%.
Option 4: $1.50 and $3.00.