Question

Pinnacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinnacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinnacle's plantwide factory overhead rate for the current year is?

Answer 1

Answer:

Overhead Rate for current year=$7 per machine hour

Step-by-step explanation:

Overhead Cost=$700000

Machine Hours Budgeted=100000

In order to calculate the Pinnacle's factory overhead rate for the current year we will consider the following formula:

Overhead rate for the current year=Budgeted overhead cost for the current year/Machne hours budgeted

$Overhead rate for the current year=\frac{700000}{100000}$

Overhead Rate for current year=$7

So Pinnacle plantwide factory overhead rate for the current year is $7 per machine hour.