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 Forming Department is closest to:

A) $23.12 per machine-hour
B) $2.00 per machine-hour
C) $5.30 per machine-hour
D) $7.30 per machine-hour