Question

Rex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are:
Compute the overhead rate for each activity. Round your answers to two decimal places.
Activity Overhead per Activity Annual Usage Overhead Rate per Activity
Machine Setups $158,875 4,100
Machine Hours 352,775 14111
Inspections 120,750 3,500

Answer 1

Answer:

Machine Setups 38.75 per set up

Machine Hours 25.00 per machine hour

Inspections 34.50 per inspection

Explanation:

Computation for the overhead rate for each activity.

Activity Overhead per Activity Annual Usage Overhead Rate per Activity

Machine Setups $158,875 ÷4,100=38.75 per set up

Machine Hours 352,775÷14111=25.00 per machine hour

Inspections 120,750÷ 3,500=34.50 per inspection

Therefore the overhead rate for each activity will be:

Machine Setups 38.75 per set up

Machine Hours 25.00 per machine hour

Inspections 34.50 per inspection