The tari's total standard machine-hours allowed for last year's output 600,000 hours
Budgeted at start of year: $100,000 fixed manufacturing overhead for 500,000 machine hours
Standard = $100,000 / 500,000 hours = $0.2 fixed overhead / maching hour
At end of year, manufacturing overhead volume was $20,000 favorable which means
$20000 / $1=0.2 = 100000 additional hours.
Total Standard Machine Allowance Allowed for output = 500,000 + 100,000 = 600,000 hours.
the use of one machine running for an hour as a basis for cost estimation and operating effectiveness evaluation. In order to determine the contribution margin per machine hour for a specific product: a. Total cost per unit divided by the quantity of machine hours required to produce each unit of the target product. The manufacturing overhead cost divided by the activity driver yields the predetermined overhead rate. For instance, if machine hours were the activity driver, you would divide overhead costs by the anticipated number of machine hours.
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