The Silver Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the Corporation made the following estimates: Dept. ADept. BDirect labor cost$60,000$40,000Manufacturing overhead$90,000$45,000Direct labor-hours 6,000 9,000Machine-hours 2,000 15,000What predetermined overhead rates would be used in Dept. A and Dept. B, respectively?
A. 150% and $3.00
B. 67% and $3.00
C. 67% and $5.00
D. 150% and $5.00
Answer: A
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