Question

Kata Systems allocates manufacturing overhead based on machine hours. Each connector should require 5 machine hours. According to the static​ budget, Kata expected to incur the​ following: nbsp 400 machine hours per month ​(80 connectors x 5 machine hours per​ connector) $ 8 comma 000 in variable manufacturing overhead costs $ 5 comma 325 in fixed manufacturing overhead costs During​ August, Kata actually used nbsp 500 machine hours to make 85 connectors and spent $ 5 comma 300 in variable manufacturing costs and $ 6 comma 000 in fixed manufacturing overhead costs. Kata's standard variable manufacturing overhead allocation rate is A. $ 33.31 per machine hour. B. $ 20.00 per machine hour. C. $ 13.31 per machine hour. D. $ 16.00 per machine hour.

Answer 1

Answer:

C. $ 13.31 per machine hour.

Explanation:

Standard variable manufacturing overhead allocation rate is calculated by dividing the Budgeted overhead by the Budgeted level of activity on which the overhead is allocated. It is a rate at which the overhead is allocated to a product / project/ department.

First we need to calculate the standard variable manufacturing overhead allocation rate using machine hours.

Standard variable manufacturing overhead allocation rate = Budgeted overheads / budgeted Machine hours

Standard variable manufacturing overhead allocation rate = $5,325 / 400 machine hours

Standard variable manufacturing overhead allocation rate =  $13.3125 per machine hour

Standard variable manufacturing overhead allocation rate = $13.31 per machine hour