Compton Company Uses a Predetermined Overhead Rate in Applying Overhead

Multiple Choice

Compton Company uses a predetermined overhead rate in applying overhead to production orders on a labour cost basis in Department A and on a machine hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates: $$\begin{array} { | l | l | l | } \hline & \text { Dept. A } & \text { Dept. B } \\\hline \text { Direct labour cost } & \$ 56,000 & \$ 33,000 \\\hline \text { Factory overhead } & \$ 67,200 & \$ 45,000 \\\hline \text { Direct labour hours } & 8,000 & 9,000 \\\hline \text { Machine hours } & 4,000 & 15,000 \\\hline\end{array}$$ What predetermined overhead rate would be used in Department A and Department B, respectively?

A) 83% and $3.
B) 120% and $3.
C) 81% and $3.
D) 83% and $5.