Tiny Corp. has provided the following information about its budgeted Manufacturing Overhead (MOH) costs. They also reported Direct Labor (DL) of $126,780 and Direct Materials (DM) of $78,699. They have broken the MOH costs into three activities:
What is Tiny's plant-wide MOH rate if allocations are based on machine hours?
A) $7.15
B) $11.53
C) $16.64
D) $20.33

Question

Tiny Corp. has provided the following information about its budgeted Manufacturing Overhead (MOH) costs. They also reported Direct Labor (DL) of $126,780 and Direct Materials (DM) of $78,699. They have broken the MOH costs into three activities:
 What is Tiny's plant-wide MOH rate if allocations are based on machine hours?
A) $7.15 
B) $11.53 
C) $16.64 
D) $20.33

Quizplus · Accepted Answer

This question requires familiarity with the formula for calculating a plant-wide MOH rate while disregarding the individual cost drivers as well as the totals for DM and DL. To calculate the plant-wide MOH rate you would take the total MOH budgeted cost of $183,000 and divide by total budgeted quantity of the cost driver of 11,000 machine hours. $183,000/11,000 machine hours = $16.64 (Choice C).

Tiny Corp Has Provided the Following Information About Its Budgeted Manufacturing