Hernandez Company has the following activities in its manufacturing process:
$$\begin{array} { | l | l | l | l | }
\hline \text { Activity } & \text { Annual Overhead Cost } & \text { Expected Annual Use } & \text { Overhead Rate } \
\hline \text { Materials handling } & \$ 60,000 & 600 \text { purchase orders } & \
\hline \text { Machine set-ups } & \$ 15,000 & 60 \text { batches } & \
\hline \text { Product testing } & \$ 28,000 & 875 \text { tests } & \
\hline
\end{array}$$ Calculate the overhead rate for each activity.

Question

Hernandez Company has the following activities in its manufacturing process:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Activity } & \text { Annual Overhead Cost } & \text { Expected Annual Use } & \text { Overhead Rate } \
\hline \text { Materials handling } & \$ 60,000 & 600 \text { purchase orders } & \
\hline \text { Machine set-ups } & \$ 15,000 & 60 \text { batches } & \
\hline \text { Product testing } & \$ 28,000 & 875 \text { tests } & \
\hline
\end{array}$$ Calculate the overhead rate for each activity.

Quizplus · Accepted Answer

The Answer of Hernandez Company has the following activities in its manufacturing process:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Activity } & \text { Annual Overhead Cost } & \text { Expected Annual Use } & \text { Overhead Rate } \
\hline \text { Materials handling } & \$ 60,000 & 600 \text { purchase orders } & \
\hline \text { Machine set-ups } & \$ 15,000 & 60 \text { batches } & \
\hline \text { Product testing } & \$ 28,000 & 875 \text { tests } & \
\hline
\end{array}$$ Calculate the overhead rate for each activity.

Hernandez Company Has the Following Activities in Its Manufacturing Process