Bassett Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling 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: MillingCustomizingMachine-hours 16,000 12,000Direct labor-hours 2,000 8,000Total fixed manufacturing overhead cost$118,400$87,200Variable manufacturing overhead per machine-hour$2.10 Variable manufacturing overhead per direct labor-hour $3.30 The predetermined overhead rate for the Milling Department is closest to:
A. $9.50 per machine-hour
B. $19.00 per machine-hour
C. $2.10 per machine-hour
D. $7.40 per machine-hour
Answer: A
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