Pinacle Corp.budgeted $700,000 of overhead cost for the current year.Actual overhead costs for the year were $650,000.Pinacle's plantwide allocation base,machine hours,was budgeted at 100,000 hours.Actual machine hours were 80,000.A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced.Pinacle's plantwide factory overhead rate for the current year is:
A) $8.13 per machine hour
B) $7.00 per machine hour
C) $6.50 per machine hour
D) $8.75 per machine hour

Question

Quizplus · Accepted Answer

The plantwide factory overhead rate is calculated by dividing the total budgeted overhead costs by the total budgeted machine hours. Therefore, $700,000 / 100,000 hours = $7.00 per machine hour.