A manufacturer of playground equipment uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: The predetermined fixed manufacturing overhead rate is closest to:
A)$12.24 per MH
B)$13.55 per MH
C)$13.87 per MH
D)$11.96 per MH

Question

A manufacturer of playground equipment uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below:  The following data pertain to operations for the most recent period:  The predetermined fixed manufacturing overhead rate is closest to:
A)$12.24 per MH 
B)$13.55 per MH 
C)$13.87 per MH 
D)$11.96 per MH

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= $40,650 ÷ 3,000 MHs = $13.55 per MH

A Manufacturer of Playground Equipment Uses a Standard Costing System