Jurica Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming 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: FormingCustomizingMachine-hours 19,000 15,000Direct labor-hours 4,000 6,000Total fixed manufacturing overhead cost$100,700$63,000Variable manufacturing overhead per machine-hour$2.00 Variable manufacturing overhead per direct labor-hour $3.90The predetermined overhead rate for the Customizing Department is closest to:
A. $14.40 per direct labor-hour
B. $3.90 per direct labor-hour
C. $4.55 per direct labor-hour
D. $10.50 per direct labor-hour
Answer: A
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