A furniture manufacturer 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 overhead rate is closest to:
A) $21.00 per hour
B) $21.43 per hour
C) $23.08 per hour
D) $22.62 per hour

Question

A furniture manufacturer 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 overhead rate is closest to:
A) $21.00 per hour 
B) $21.43 per hour 
C) $23.08 per hour 
D) $22.62 per hour

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= ($12,040 + $17,360) ÷ 1,400 hours
= $29,400 ÷ 1,400 hours
= $21.00 per hour

A Furniture Manufacturer Uses a Standard Costing System in Which