Gray Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product Q.

A) 50 MH per unit of Q.
B) 0.50 MH per unit of Q.
C) 0.75 MH per unit of Q.
D) 17.5 MH per unit of Q.
E) 30 MH per unit of Q.

Question

Gray Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product Q.

A) 50 MH per unit of Q. 
B) 0.50 MH per unit of Q. 
C) 0.75 MH per unit of Q. 
D) 17.5 MH per unit of Q. 
E) 30 MH per unit of Q.

Quizplus · Accepted Answer

Total cost per unit of Q:
$60 = DM + DL + OH
$60 = $15 + $30 + X
X = $15 overhead per unit of Q
Plantwide overhead rate: $100,000/200,000 MH = $0.50 per MH
MH per unit of Q: $15/$0.50 = 30 MH per unit of Q

Gray Company Uses a Plantwide Overhead Rate with Machine Hours