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Riverview Company's budget for the coming year includes $6,000,000 for manufacturing overhead,50,000 hours of direct labor,and 250,000 hours of machine time.
-If Riverview applies overhead using a predetermined rate based on machine-hours,what amount of overhead will be assigned to a unit of output which requires 0.5 machine hours and 0.25 labor hours to complete?
A)$12.00
B)$16.00
C)$20.00
D)$ 6.00

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the total manufacturing overhead by the total machine hours. $6,000,000 / 250,000 machine hours = $24 per machine hour. For a unit requiring 0.5 machine hours, the overhead assigned is 0.5 * $24 = $12.00.

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