Morton Manufacturing Company Has Two Support Departments, Maintenance Department and Personnel

Multiple Choice

Morton Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $90,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $13,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $27,000 and $45,000, respectively. Data on standard service hours and number of employees are as follows: $\begin{array}{lcccc}&\text { Maint. } & \text { Person. } & \text { Dept. } & \text { Dept. } \\&\text { Dest. } & \text { Dept. } & \underline{X} & \underline{Y}\\\text { Standard service hours used } & 200 & 150 & 1,200 & 600 \\\text { Number of employees } & 25 & 50 & 75 & 75 \\\text { Direct labor hours } & 250 & 250 & 1,000 & 500\end{array}$
Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours.
What is the overhead rate for Department X assuming the direct method is used?

A) $27.00
B) $81.00
C) $46.88
D) $93.75