Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking 0.75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A) $11.57 per unit
B) $8.17 per unit
C) $5.61 per unit
D) $12.43 per unit
E) $10.89 per unit

Question

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking 0.75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A) $11.57 per unit 
B) $8.17 per unit 
C) $5.61 per unit 
D) $12.43 per unit 
E) $10.89 per unit

Quizplus · Accepted Answer

($3,107,500 + $1,520,000)/(250,000 + 175,000) MH = $10.89 per MH
$10.89 × .75 = $8.17 per unit

Lake Erie Company Uses a Plantwide Overhead Rate with Machine