Question

Big Trail Running Company has started to produce running apparel in addition to the trail running shoes that they have manufactured for years. They feel that a departmental overhead rate would best reflect their overall manufacturing overhead usage. Based on research the following information was gathered for the upcoming year: Machining Department $800,000 Finishing Department $200,000 Estimated Manufacturing Overhead by Department Trail Running Shoes Running Apparel 60,000 machine hours 40,000 machine hours 18,000 direct labor hours 62,000 direct labor hours Manufacturing overhead is driven by machine hours for the machining department and direct labor hours for the finishing department. Based on this information, what is the departmental manufacturing overhead rate for the machining and finishing department, respectively? (Round any intermediary calculations and your final answer to the nearest cent.) O A. $13.33 per machine hour and $3.23 per direct labor hour OB. $20.00 per machine hour and $11.11 per direct labor hour OC. $10.00 per machine hour and $12.50 per direct labor hour OD. $8.00 per machine hour and $2.50 per direct labor hour

Answer 1

Answer with working is given below

Answer is Option D) Machine hour rate $8.00 Machining Department Finishing Department Direct labor hour rate $2.50 Estimated Overhead Total Machine hours Total Direct Labor hours Machine hour rate Direct labor hour rate Machining Finishing Department Department $800,000 $200,000 100,000 80,000 $8.00 ($800,000/100,000) $2.50 ($200,000/80,000)