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Anastaziya [24]
2 years ago
7

Morgana Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated

annual overhead cost for each activity is $140,000, $240,000, and $54,000, respectively. The cost driver for each activity and the estimated annual usage are number of setups 2,000, machine hours 24,000, and number of inspections 1,200.
Required:
Compute the overhead rate for each activity.
Business
1 answer:
grandymaker [24]2 years ago
4 0

Answer:

Machine setups= $70 per setup

Machining= $10 per machine hour

Inspection= $45 per inspection

Explanation:

<u>To calculate the allocation rate for each activity, we need to use the following formula:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machine setups= 140,000 / 2,000= $70 per setup

Machining= 240,000 / 24,000= $10 per machine hour

Inspection= 54,000 / 1,200= $45 per inspection

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