Chopra Company, which makes golf carts and lawn tractors, uses departmental rates to allocate overhead costs. It uses direct materials costs as the basis for allocating overhead in Department A. Machine hours are the driver for Department B. Information related to product costs for last year was as follows:

In addition, you know that the firm budgets manufacturing overhead in department A at $9,000,000 and in department B at $3,000,000.

Required:
a. What is the overhead rate for the two departments?
b. What is the inventoriable value per lawntractor?

Transcribed Image Text:

Golf Carts $6,000 S500 Lawn Tractors Annual production and Sales Direct material (per unit) Direct labor cost (per unit): 4,000 units 2,000 units $6,000 Dept. A Dept. B $1,000 $750 $1,000 Machine hours (per unit): Dept. A Dept. B 10 40 20