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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 labor-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)$16.00
B)$30.00
C)$20.00
D)$60.00

Question

Quizplus · Accepted Answer

The predetermined overhead rate based on labor-hours is calculated by dividing the total budgeted manufacturing overhead ($6,000,000) by the total budgeted labor-hours (50,000 hours), which equals $120 per labor-hour. For a unit requiring 0.25 labor hours, the overhead assigned is 0.25 hours * $120/hour = $30.00.

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