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

-The predetermined overhead rate is closest to:
A) $8.69 per machine-hour
B) $10.47 per machine-hour
C) $6.98 per machine-hour
D) $13.03 per machine-hour

Question

(Appendix 10A) Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
 
-The predetermined overhead rate is closest to:
A) $8.69 per machine-hour 
B) $10.47 per machine-hour 
C) $6.98 per machine-hour 
D) $13.03 per machine-hour

Quizplus · Accepted Answer

Predetermined overhead rate = $209,400/30,000 machine-hours = $6.98 per machine-hour

(Appendix 10A) Arca Incorporated Makes a Single Product--A Critical Part