Regal Company uses a single cost pool for fixed manufacturing overhead. The amount for June 2012 was budgeted at $500,000; however, the actual amount was $700,000. Actual production for June was 12,500 units, and actual machine hours were 10,000. Budgeted production included 17,750 units and 12,375 machine hours. What is the budgeted fixed overhead rate per machine hour?
A) $28.17 per machine hour
B) $39.44 per machine hour
C) $40.40 per machine hour
D) $56.56 per machine hour
E) $65.17 per machine hour

Question

Quizplus · Accepted Answer

The budgeted fixed overhead rate per machine hour can be calculated using the following formula:

Budgeted Fixed Overhead Rate per Machine Hour = Budgeted Fixed Manufacturing Overhead / Budgeted Machine Hours

Plugging in the values, we get:

Budgeted Fixed Overhead Rate per Machine Hour = $500,000 / 12,375
Budgeted Fixed Overhead Rate per Machine Hour = $40.40 per machine hour

Therefore, the best choice is C.

Regal Company Uses a Single Cost Pool for Fixed Manufacturing