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.