predetermined overhead rate 461023

The following information pertains to Charter Company:

Service Departments Producing Departments

Personnel Maintenance Fabrication Assembly

Budgeted overhead $80,000 $144,000 $280,000 $320,000

Direct labor hours 4,000 5,000 16,000 20,000

Machine hours 24,000 16,000

Number of employees 8 10 30 50

Charter Company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated 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