Chapter 23, Problem 7QC

FrontGrade Systems allocates manufacturing overhead based on machine hours. Each connector should require 11 machine hours. According to the static budget, FrontGrade expected to incur the following:

1,100 machine hours per month

(100 connectors x 11 machine hours per connector)
$5,500 in variable manufacturing overhead costs
$8,250 in fixed manufacturing overhead costs

During August, FrontGrade actually used 1,000 machine hours to make 110 connectors and spent $5,600 in variable manufacturing costs and $8,300 in fixed manufacturing overhead costs.

7. FrontGrade’s standard variable manufacturing overhead allocation rate is

Learning Objective 4

1. $5.00 per machine hour.
2. $5.50 per machine hour.
3. $7.50 per machine hour.
4. $12.50 per machine hour.