Fatzinger Corporation has two production departments, Milling and Assembly. 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 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: Milling Assembly
Machine—hours 20,000 14,000
Direct labor—hours 2,000 7,000
Total fixed manufacturing Overhead cost $137,000 $57,400
Variable manufacturing overhead per machine—hour $2.30
Variable manufacturing overhead per direct labor—hour $3.40

The predetermined overhead rate for the Assembly Department is closest to:

$11.60 per direct labor-hour

Explanation:

Calculation for what The predetermined overhead rate for the Assembly Department is closest to:

First step is to calculate the Assembly Department overhead cost

Assembly Department overhead cost= $57,400 + ($3.40 per direct labor-hour × 7,000 direct labor-hours)

Assembly Department overhead cost= $57,400 + $23,800

Assembly Department overhead cost = $81,200

Now let calculate the Predetermined overhead rate

Predetermined overhead rate = $81,200 ÷7,000 direct labor-hours

Predetermined overhead rate = $11.60 per direct labor-hour

Therefore The predetermined overhead rate for the Assembly Department is closest to:$11.60 per direct labor-hour

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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