Find the predetermined overhead rate

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Question - Garza Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

 

Casting

Customizing

Machine-hours

20,000

13,000

Direct labor-hours

1,000

7,000

Total fixed manufacturing overhead cost

$152,000

$68,600

Variable manufacturing overhead per machine- hour

$2.10

 

 

Variable manufacturing overhead per direct labor-hour

 

$4.30

 

Required - Find the predetermined overhead rate for the Casting Department?

a. $7.60 per machine-hour

b. $27.71 per machine-hour

c. $2.10 per machine-hour

d. $9.70 per machine-hour

Reference no: EM132448201

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