Stopher Incorporated makes a single product-a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The variable component of the predetermined overhead rate is closest to:
A) $1.67 per machine-hour
B) $1.81 per machine-hour
C) $1.76 per machine-hour
D) $1.19 per machine-hour

Question

Stopher Incorporated makes a single product-a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:  The variable component of the predetermined overhead rate is closest to:
A) $1.67 per machine-hour 
B) $1.81 per machine-hour 
C) $1.76 per machine-hour 
D) $1.19 per machine-hour

Quizplus · Accepted Answer

Variable component of the predetermined overhead rate = $45,220/38,000 machine-hours
= $1.19 per machine-hour

Stopher Incorporated Makes a Single Product-A Cooling Coil Used in Commercial