Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June,the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours: During June,17,000 machine-hours were used to complete 13,000 units of product,and the following actual total overhead costs were incurred: At standard,each unit of finished product requires 1.4 hours of machine time. The total predetermined overhead rate per machine-hour for June was:
A)$2.57 per machine-hour
B)$1.30 per machine-hour
C)$2.80 per machine-hour
D)$3.15 per machine-hour

Question

Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June,the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours:  During June,17,000 machine-hours were used to complete 13,000 units of product,and the following actual total overhead costs were incurred:  At standard,each unit of finished product requires 1.4 hours of machine time. The total predetermined overhead rate per machine-hour for June was:
A)$2.57 per machine-hour 
B)$1.30 per machine-hour 
C)$2.80 per machine-hour 
D)$3.15 per machine-hour

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = ($16,000 + $10,000 + $20,500 + $9,500)÷ 20,000 machine-hours
= $56,000 ÷ 20,000 machine-hours = $2.80 per machine-hour

Pohl Corporation Uses a Standard Cost System in Which Manufacturing