Merati Corporation has two manufacturing departments--Forming and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: FormingAssemblyTotalEstimated total machine-hours (MHs) 5,000 5,000 10,000Estimated total fixed manufacturing overhead cost$28,000$10,500$38,500Estimated variable manufacturing overhead cost per MH$1.80$2.60 During the most recent month, the company started and completed two jobs--Job B and Job L. There were no beginning inventories. Data concerning those two jobs follow: Job AJob LForming machine-hours 3,400 1,600Assembly machine-hours 2,000 3,000Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. The
departmental predetermined overhead rate in the Forming Department is closest to:
A. $7.40
B. $1.80
C. $6.05
D. $5.60
Answer: A
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