A business has two production departments: machining and assembly. The budgeted direct labour hours for each department are:
machining 4000
assembly 16 000.
The business has calculated overhead absorption rates as:
machining $12 per direct machining hour
assembly $7.70 per direct labour hour.
Insurance of $4800 relating to the assembly department was incorrectly omitted when making the
calculations.
What is the correct overhead absorption rate for the assembly department?
1 )
$6.40
2 )
$7.94
$8.00
4 )
$8.80
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