A company estimates that overhead costs for the next year will be $7,940,000 for indirect labor and $161,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 765,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

A company estimates that overhead costs for the next year will be $7,940,000 for indirect labor and $161,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 765,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 23Q: If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of...

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Question

What is the company s plantwide overhead rate?

A company estimates that overhead costs for the
next year will be $7,940,000 for indirect labor
and $161,500 for factory utilities. The company
uses machine hours as its overhead allocation
base. If 765,000 machine hours are planned for
this next year, what is the company's plantwide
overhead rate?

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