Question

Campaign Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 12,000 Actual fixed overhead incurred: $730,000 Actual machine hours worked: 60,000 Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 50,000 If Campaign estimates four hours to manufacture a completed unit, the company's standard fixed overhead rate per machine hour would be:

Answer 1

Answer:

Predetermined manufacturing overhead rate= $14.4 per machine hour

Explanation:

Giving the following information:

Budgeted fixed overhead: $720,000

The planned level of machine-hour activity: 50,000

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

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

Predetermined manufacturing overhead rate= 720,000 / 50,000

Predetermined manufacturing overhead rate= $14.4 per machine hour