Answer the following questions using the information below:
Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.

-For Gibson Manufacturing, what is the annual manufacturing overhead cost-allocation rate?
A)$0.50
B)$0.80
C)$0.30
D)$33.33

Question

Answer the following questions using the information below:
Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.
 
-For Gibson Manufacturing, what is the annual manufacturing overhead cost-allocation rate?
A)$0.50 
B)$0.80 
C)$0.30 
D)$33.33

Quizplus · Accepted Answer

The annual manufacturing overhead cost-allocation rate is calculated by dividing the estimated total manufacturing overhead cost by the estimated total machine-hours. In this case, the estimated total manufacturing overhead cost is $150,000 and the estimated total machine-hours are 500,000. Dividing $150,000 by 500,000 gives a manufacturing overhead cost-allocation rate of $0.30 per machine-hour.

There are no options provided for this question regarding the best choice(s).

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