(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 fixed component of the predetermined overhead rate is closest to:
A) $8.25 per machine-hour
B) $12.38 per machine-hour
C) $5.69 per machine-hour
D) $8.54 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 fixed component of the predetermined overhead rate is closest to:
A) $8.25 per machine-hour 
B) $12.38 per machine-hour 
C) $5.69 per machine-hour 
D) $8.54 per machine-hour

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $170,700/30,000 machine-hours
= $5.69 per machine-hour

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