A company produces computer chips that go through two departments, department A1 and department B2, before they are complete. Expected costs and activities for the two departments are shown below. Departmental overhead rates are based on machine hours in department A1 and direct labor hours in department B2. Therefore, the overhead rates for department A1 and department B2 are $3.62 per machine hour and $5.73 per direct labor hour, respectively. Department A1Department B2Machine hours 40,000MH 30,000MHDirect labor hours 36,200DLH 28,650DLHOverhead costs$144,800 $171,900
Answer the following statement true (T) or false (F)
False
Dept. A1 $144,800/40,000 MH = $3.62 per MH
Dept. B2 $171,900/28,650 DLH = $6.00 per DLH
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What will be an ideal response?