Jurica Corporation Has Two Production Departments, Forming and Customizing

Multiple Choice

Jurica Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming 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: The predetermined overhead rate for the Customizing Department is closest to:

A) $4.55 per direct labor-hour
B) $3.90 per direct labor-hour
C) $10.50 per direct labor-hour
D) $14.40 per direct labor-hour