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

Essay

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:
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