A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as 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) $10.15 per MH
B) $9.56 per MH
C) $9.65 per MH
D) $10.06 per MH

Question

A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as 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) $10.15 per MH 
B) $9.56 per MH 
C) $9.65 per MH 
D) $10.06 per MH

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= $58,870 ÷ 5,800 MHs = $10.15 per MH

A Manufacturer of Playground Equipment Has a Standard Costing System