Question

Stopher Incorporated makes a single product. The company has a standard cost system in which it applies overhead to this product based on machine-hours. Data for last year appear below: budgeted variable overhead $ 45,220 budgeted production 20,000 units standard machine-hours per unit 1.90 machine-hours actual production 21,000 units actual variable overhead $66,789 actual machine-hours 36,900 machine-hours The variable component of the predetermined overhead rate is closest to:

Answer 1

Answer:

$1.19 per machine-hour

Explanation:

Variable component of the predetermined overhead rate =

Budgeted variable overhead $ 45,220

÷

Budgeted production 20,000 units ×Standard machine-hours per unit 1.90 machine-hours =38,000

Hence:

$45,220/38,000 machine-hours

= $1.19 per machine-hour

Therefore the variable component of the predetermined overhead rate is closest to: $1.19 per machine-hour