Answer:
Budgeted Variable overhead Cost rate per unit is $13.3
Explanation:
Variable overhead Costs is $150,000
Estimated Machine hours = 15,000 hours
We have to first derive the Cost rate Per hour of production
This will be: = (Variable overhead costs) $150,000 divided by (Machine Hours) 15,000 hrs
= $10 Per Machine Hour
This interprets as the for every machine hour spent on production we incur $10.
Subsequently, 20,000 units were produced with the entire 15,000 machine hours.
This implies, 1 machine hour will produce = (20,000units/15,000hrs) units = 1.33 units
Budgeted Variable overhead Cost rate per unit will now become = $10 per Machine Hour x 1.33 units per machine hour = $13.3/Unit of production
