A radial tire manufacturer produces products in two departments-Division A and B.The company uses separate allocation rates for each department to allocate its overhead.Division A and B have estimated manufacturing overhead costs of $150,000 and $ 350,000,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 30,000 and direct labor hours were 20,000 for the year.Calculate the departmental overhead allocation rates.
A)Division A-$5,Division B-$17.5
B)Division A-$17.5,Division B-$6
C)Division A-$6,Division B-$18.2
D)Division A-$4,Division B-$14.6

Question

Quizplus · Accepted Answer

To calculate the departmental overhead allocation rates, we need to divide the estimated overhead costs of each department by its respective allocation base:

Division A: $150,000 ÷ 30,000 machine hours = $5 per machine hour
Division B: $350,000 ÷ 20,000 direct labor hours = $17.5 per direct labor hour

Therefore, the correct choice is A) Division A-$5, Division B-$17.5.

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