Eisentrout Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining 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: MachiningCustomizingMachine-hours 16,000 11,000Direct labor-hours 2,000 6,000Total fixed manufacturing overhead cost$104,000$56,400Variable manufacturing overhead per machine-hour$2.10 Variable manufacturing overhead per direct labor-hour $3.30 During the current month the company started and finished Job T272. The following
data were recorded for this job: Job T272:MachiningCustomizingMachine-hours 60 30Direct labor-hours 10 60The predetermined overhead rate for the Machining Department is closest to:
A. $8.60 per machine-hour
B. $2.10 per machine-hour
C. $22.93 per machine-hour
D. $6.50 per machine-hour
Answer: A
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