Raindrop Gear Utilizes Job-Order Costing for Production of Customized Umbrellas

Raindrop Gear utilizes job-order costing for production of customized umbrellas.Each division establishes its own estimates regarding overhead, which are as follows: $\begin{array}{lrr}&\text { Division } \mathrm{A}&\text { Division } \mathrm{B}\\\text { Total estimated overhead } & \$ 78,750 & \$ 240,000 \\\text { Total estimated machine hours } & 26,250 & 15,000 \\\text { Total estimated direct labor costs } & \$ 262,500 & \$ 120,000\end{array}$ If Division A allocates overhead on the basis of direct labor costs, and Division B allocates overhead based on machine hours, what will be the predetermined overhead rate for each division? $\begin{array}{lll}&\text { Division } \mathrm{A}&\text { Division } \mathrm{B}\\\text { A. } & \$ 3.00 \text { per direct labor dollar } & \$ 16.00 \text { per machine hour } \\\text { B. } & \$ 3.00 \text { per machine direct labor dollar } & \$ 0.625 \text { per machine hour } \\\text { C. } & \$ 0.30 \text { per machine direct labor dollar } & \$ 16.00 \text { per machine hour } \\\text { D. } & \$ 0.30 \text { per machine direct labor dollar } & \$ 2.00 \text { per machine hour }\end{array}$