Western Company allocates $10 overhead to products based on the number of machine hours used. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

A) 33,000 MH
B) 137,500 MH
C) 82,500 MH
D) 88,000 MH
E) 25,000 MH

Question

Western Company allocates $10 overhead to products based on the number of machine hours used. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

A) 33,000 MH 
B) 137,500 MH 
C) 82,500 MH 
D) 88,000 MH 
E) 25,000 MH

Quizplus · Accepted Answer

$10 = ($250,000 + $150,000)/total estimated machine hours $400,000/$10 = 40,000 MH
Dept. 1 MH + Dept. 2 MH = 40,000 MH
15,000 MH + x MH = 40,000 MH
x MH = 25,000 MH

Western Company Allocates $10 Overhead to Products Based on the Number