If estimated production overhead in the assembly department is $240,000 and actual overhead is $216,000 and estimated machine hours in the assembly department are 60,000 hours and actual machine hours are 62,000 hours, using normal costing what is the overhead allocation rate?
A) $3.60 per machine hour
B) $4 per machine hour
C) $3.87 per machine hour
D) $3.49 per machine hour

Question

Quizplus · Accepted Answer

The overhead allocation rate is calculated by dividing the estimated production overhead by the estimated machine hours. Therefore, $240,000 / 60,000 hours = $4 per machine hour.

If Estimated Production Overhead in the Assembly Department Is $240,000