(Appendix 10A) A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:

-If the denominator level of activity is 6,100 machine-hours,the fixed component in the predetermined overhead rate would be:
A) $520.00 per machine-hour
B) $39.68 per machine-hour
C) $5.20 per machine-hour
D) $44.88 per machine-hour

Question

(Appendix 10A) A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
  The following data pertain to operations for the most recent period:
 
-If the denominator level of activity is 6,100 machine-hours,the fixed component in the predetermined overhead rate would be:
A) $520.00 per machine-hour 
B) $39.68 per machine-hour 
C) $5.20 per machine-hour 
D) $44.88 per machine-hour

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = Estimated total fixed manufacturing overhead ÷ Denominator level of activity = $242,048 ÷ 6,100 machine-hours = $39.68 per machine-hour

(Appendix 10A) a Furniture Manufacturer Uses a Standard Costing System