Randy's Production Company uses a single cost pool for fixed manufacturing overhead. The amount for May 2012 was budgeted at $250,000; however, the actual amount was $350,000. Actual production for May was 12,500 units, and actual machine hours were 10,000. Budgeted production included 17,750 units and 12,375 machine hours. What is the budgeted fixed overhead rate per input unit?
A) $25.00 per unit
B) $35.00 per unit
C) $20.00 per unit
D) $14.09 per unit
E) $14.08 per unit

Question

Quizplus · Accepted Answer

First, we need to calculate the actual fixed overhead rate per unit, using the actual amount of fixed overhead and the actual number of machine hours:

Actual fixed overhead rate = $350,000 / 10,000 machine hours = $35.00 per machine hour

Next, we need to use this actual rate to calculate the budgeted rate per unit, based on the budgeted number of machine hours:

Budgeted fixed overhead rate = $35.00 x (12,375 machine hours / 17,750 units) = $24.56 per unit

Therefore, the correct answer is D, $14.09 per unit. This is calculated by dividing the budgeted fixed overhead ($250,000) by the budgeted number of units (17,750):

Budgeted fixed overhead rate = $250,000 / 17,750 units = $14.09 per unit

Randy's Production Company Uses a Single Cost Pool for Fixed