A radial tire manufacturer produces products in two departments—Divisions A and B. The company uses separate predetermined overhead allocation rates for each department to allocate its overhead. Divisions A and B have estimated manufacturing overhead costs of $150,000 and $350,000, respectively. Division A uses machine hours as the allocation base, and Division B uses direct labor hours as the allocation base. The total estimated machine hours were 31,000, and direct labor hours were 20,000 for the year.
Calculate the departmental predetermined overhead allocation rates. (Round your answer to the nearest cent.)
A) Division A—$4.84, Division B—$17.50
B) Division A—$17.50, Division B—$4.84
C) Division A—$7.50, Division B—$11.29
D) Division A—$11.29, Division B—$7.50
A) Division A—$4.84, Division B—$17.50
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