Tiff Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Assembly 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: CastingCustomizingMachine-hours 17,000 10,000Direct labor-hours 1,000 5,000Total fixed manufacturing overhead cost$129,200$46,500Variable manufacturing overhead per machine-hour$1.80 Variable manufacturing overhead per direct labor-hour $3.80 During the current month the company started and finished Job P131. The following data were recorded
for this job: Job P131:MachiningCustomizingMachine-hours 90 20Direct labor-hours 20 60The predetermined overhead rate for the Casting Department is closest to:
A. $7.60 per machine-hour
B. $1.80 per machine-hour
C. $9.40 per machine-hour
D. $31.96 per machine-hour
Answer: C
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