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 The predetermined overhead rate for the Casting Department is closest to what?

Answer 1