overhead rate 461024

The following information pertains to Charter Company:

Service Depts

Personnel

Budgeted overhead: $80,000

Direct labor hours: 4,000

Machine hours: 0

Number of employees: 8

Maintenance

Budgeted overhead: $144,000

Direct labor hours: 5,000

Machine hours: 0

Number of employees: 10

Producing Departments

Fabrication

Budgeted overhead: $280,000

Direct labor hours: 16,000

Machine hours: 24,000

Number of employees: 30

Assembly

Budgeted overhead: $320,000

Direct labor hours: 20,000

Machine hours: 16,000

Number of employees: 50

Charter does not divide costs into fixed and variable cost components. Personnel costs are allocated based on the number of employees and maintenance costs are based on machine hours. Predetermined overhead rates for Fabrication and Assembly are based on direct labor hours. (Round amounts to dollars) If the direct method is used to allocate service department costs, the predetermined overhead rate for the Fabrication Department (rounded to 2 decimal places) would be:

A. $16.00

B. $21.38

C. $22.89

D. $24.78