Question

A manufacturer uses machine hours to assign overhead costs to products. Budgeted information for the next year follows. Budgeted factory overhead costs $ 669,600 Budgeted machine hours 7,200 Compute the plantwide overhead rate for the next year based on machine hours.

Answer 1

Answer: $93 per machine hour

Explanation:

The plantwide rate shows the cost per labor hour(machine hour in this case) for overhead incurred by the entire production plant.

Plantwide overhead rate based on machine hours:

= Budgeted factory overhead costs / Budgeted machine hours

= 669,600 / 7,200

= $93 per machine hour