Lamar Corporation uses departmental manufacturing overhead rates to apply overhead. Direct labor cost is used to apply manufacturing overhead in Department A and machine hours are used for Department B. Dept. A Dept. B Direct Labor Cost $66,000 $33,000 Factory Overhead $79,200 $60,000 Direct Labor Hours 8,000 9,000 Machine Hours 4,000 15,000 What predetermined overhead rate would be used for departments A and B respectively? a. 83%; $5 b. 83%; $3 c. 120%; $4 d.$8.40; $5

Question

Duncan Davies

Business

12 February, 18:59

Lamar Corporation uses departmental manufacturing overhead rates to apply overhead. Direct labor cost is used to apply manufacturing overhead in Department A and machine hours are used for Department B. Dept. A Dept. B Direct Labor Cost $66,000 $33,000 Factory Overhead $79,200 $60,000 Direct Labor Hours 8,000 9,000 Machine Hours 4,000 15,000 What predetermined overhead rate would be used for departments A and B respectively? a. 83%; $5 b. 83%; $3 c. 120%; $4 d.$8.40; $5

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Rylee Allen · Answer 1

c. 120%; $4

Explanation:

Consider the following formulas to calculate the ratios

Predetermined overhead rate for Department A = Factory Overhead/Direct Labor cost = 79.200/66.000*100=120%.

Predetermined overhead rate for Department B = Factory Overhead/Machine Hours = 60.000/15.000 = $4