Bassett Corporation Has Two Production Departments, Milling and Customizing

Multiple Choice

Bassett Corporation has two production departments, Milling and Customizing. 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 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 Milling Department is closest to:

A) $19.00 per machine-hour
B) $2.10 per machine-hour
C) $9.50 per machine-hour
D) $7.40 per machine-hour