Answer:
The correct answer is A.
Explanation:
Giving the following information:
Dept.A Dept.B
Direct labor cost $ 63,000 $ 40,000
Manufacturing overhead $ 80,010 $ 68,450
Machine-hours 4,700 18,500
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Departement A:
Estimated manufacturing overhead rate= 80,100/63,000= $1.127 per direct labor cost
In % terms= 127% of direct labor cost.
Department B:
Estimated manufacturing overhead rate= 68,450/18,500= $3.7 per machine hours
