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Anvisha [2.4K]
3 years ago
5

Peterson Company estimates that overhead costs for the next year will be $6,520,000 for indirect labor and $550,000 for factory

utilities. The company uses machine hours as its overhead allocation base. If 140,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?
a. $.02147 per machine hour.
b. $50.50 per machine hour.
c. $45.75 per machine hour.
d. $3.9286 per machine hour.
e. $.2545 per machine hour.
Business
2 answers:
Lena [83]3 years ago
5 0

Answer:

The correct option is B,$50.50

Explanation:

The company's plantwide overhead rate is computed by dividing total budgeted overhead costs by the planned machine hours which is the overhead allocation base:

Plantwide overhead rate=Total budgeted overhead/machine hours

total budgeted overhead =$6,520,000+$550,000

                                           =$7,070,000

budgeted machine hours is 140,000 hours

plantwide overhead rate=$7,070,000/140,000

                                         =$50.50

Hunter-Best [27]3 years ago
4 0

Answer:

b. $50.50 per machine hour.

Explanation:

Overhead costs are defined as the amount that is spent by a business that is not directly contributing to the product. For example overhead can be labour cost, rent, utilities, and insurance.

These do not contribute directly to the product. Direct cost such as are materials contribute directly to the product.

In the case the overhead costs are given as $6,520,000 for indirect labor and $550,000 for factory utilities.

Total overhead= 6,520,000 + 550,000

Total overhead= $7,070,000

Overhead Cost per hour= Total overhead ÷ Total machine hours

Overhead cost per hour= 7,070,000 ÷ 140,000= $50.50

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A lawnmower manufacturer estimates that the probability of a fatal accident caused by the design of its product is 1/10,000 and
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1 year ago
Whispering Winds Corp. uses the periodic inventory system and reports the following for the month of June.
vesna_86 [32]

Answer:

a 1) FIFO

Closing Inventory = $1,760

Cost of Goods sold = $11,264

2) LIFO

Closing Inventory = $1,056

Cost of Goods sold = $11,968

b) FIFO gives the higher ending inventory than LIFO because the oldest items and lowest costs are allocated to the cost of goods sold.

c) LIFO results in higher cost of Goods sold because latest cost are allocated to the cost of goods sold and latest cost may include price increases.

Explanation:

FIFO

Closing inventory = 176 units * $10= $1760

Cost goods sold = 352 units + 704+528 -176 =1,408 units sold

from opening $2,112

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23 June   = ( 528-176) =352 units * 10 =3,520

total sold = $11,264

LIFO

Closing inventory = 176 units * 6 = $1,056

Cost goods sold =  352 units + 704+528 -176 =1,408 units sold

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