A radial tire manufacturer produces products in two departments-Divisions A and B.The company uses separate predetermined overhead allocation rates for each department to allocate its overhead.Divisions A and B have estimated manufacturing overhead costs of $160,000 and $360,000,respectively.Division A uses machine hours as the allocation base,and Division B uses direct labor hours as the allocation base.The total estimated machine hours were 31,000,and direct labor hours were 22,000 for the year.Calculate the departmental predetermined overhead allocation rates.(Round your answer to the nearest cent.)
A)Division A-$5.16,Division B-$16.36
B)Division A-$16.36,Division B-$5.16
C)Division A-$7.27,Division B-$11.61
D)Division A-$11.61,Division B-$7.27

Question

Quizplus · Accepted Answer

Division A predetermined overhead allocation rate = Estimated manufacturing overhead costs / Estimated machine hours
= $160,000 / 31,000
= $5.16 per machine hour

Division B predetermined overhead allocation rate = Estimated manufacturing overhead costs / Estimated direct labor hours
= $360,000 / 22,000
= $16.36 per direct labor hour

Therefore, the correct answer is A) Division A-$5.16, Division B-$16.36.

A Radial Tire Manufacturer Produces Products in Two Departments-Divisions a and B.The