The Ramapo Company uses a single overhead rate to apply all overhead costs.What would the single plantwide rate be if it was based on machine hours instead of labor hours?
A) $9.00 per machine hour
B) $19.50 per machine hour
C) $7.43 per machine hour
D) $4.00 per machine hour

Question

Quizplus · Accepted Answer

The single overhead rate is calculated by dividing the estimated total overhead cost by the estimated total amount of the allocation base. If the company switches to machine hours as the allocation base, the calculation would be: 
Estimated total overhead cost ÷ estimated total machine hours
= $223,500 ÷ 30,000 machine hours
= $7.45 per machine hour (rounded to nearest cent)
Therefore, the best choice is C, which is the closest option to $7.45 per machine hour.

The Ramapo Company Uses a Single Overhead Rate to Apply