Pinacle Corp. budgeted $350,000 of overhead cost for 2012. Actual overhead costs for the year were $325,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 50,000 hours. Actual machine hours were 40,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for 2012 is:
A) $8.13 per machine hour
B) $7.00 per machine hour
C) $6.50 per machine hour
D) $8.75 per machine hour

Question

Quizplus · Accepted Answer

The plantwide factory overhead rate is calculated by dividing the budgeted overhead costs by the budgeted machine hours: $350,000 / 50,000 hours = $7.00 per machine hour.