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Bassett Corporation has two production departments, Milling and Customizing

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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:

Milling

Customizing

Machine-hours

16,000

12,000

Direct labor-hours

2,000

8,000

 

Total fixed manufacturing overhead cost

$

118,400

$

87,200

Variable manufacturing overhead per machine-hour

$

2.10

Variable manufacturing overhead per direct labor-hour

$

3.30

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