(Appendix 10A) Stopyra Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

-If the denominator level of activity is 7,600 machine-hours,the predetermined overhead rate would be:
A) $1,900.00 per machine-hour
B) $19.00 per machine-hour
C) $189.75 per machine-hour
D) $208.75 per machine-hour

Question

(Appendix 10A) Stopyra Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
 
-If the denominator level of activity is 7,600 machine-hours,the predetermined overhead rate would be:
A) $1,900.00 per machine-hour 
B) $19.00 per machine-hour 
C) $189.75 per machine-hour 
D) $208.75 per machine-hour

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity
= [$1,442,100 + ($19.00 per machine-hour × 7,600 machine-hours] ÷ 7,600 machine-hours
= [$1,442,100 + $144,400] ÷ 7,600 machine-hours
= $1,586,500 ÷ 7,600 machine-hours
= $208.75 per machine-hour

(Appendix 10A) Stopyra Incorporated Makes a Single Product--A Cooling Coil