Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the best-selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:

Wall Nuts' total expected overhead costs and related overhead data are shown below.

-Use the data for Wall Nuts,Inc.to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.
A)$4.50 per MH in Dept.A; $4.50 per MH in Dept.B.
B)$7.50 per MH in Dept.A; $7.50 per MH in Dept.B.
C)$4.50 per MH in Dept.A; $7.50 per MH in Dept.B.
D)$2.70 per MH in Dept.A; $6.00 per MH in Dept.B.
E)$0.60 per MH in Dept.A; $0.80 per MH in Dept.B.

Question

Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the best-selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:

Wall Nuts' total expected overhead costs and related overhead data are shown below.

-Use the data for Wall Nuts,Inc.to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.
A)$4.50 per MH in Dept.A; $4.50 per MH in Dept.B. 
B)$7.50 per MH in Dept.A; $7.50 per MH in Dept.B. 
C)$4.50 per MH in Dept.A; $7.50 per MH in Dept.B. 
D)$2.70 per MH in Dept.A; $6.00 per MH in Dept.B. 
E)$0.60 per MH in Dept.A; $0.80 per MH in Dept.B.

Quizplus · Accepted Answer

To calculate departmental overhead rates based on machine hours (MH), you divide the total overhead for each department by the total machine hours in that department. The correct rates are $4.50 per MH in Department A and $7.50 per MH in Department B, indicating different overhead costs and/or machine usage between the two departments.