The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
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 MH
B) $19.50 per MH
C) $7.43 per MH
D) $4.00 per MH

Question

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.  All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
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 MH 
B) $19.50 per MH 
C) $7.43 per MH 
D) $4.00 per MH

Quizplus · Accepted Answer

To calculate the plantwide overhead rate using machine hours, we need to divide the total estimated overhead by the total estimated machine hours. Total estimated overhead is $84,000 + $72,000 = $156,000. Total estimated machine hours are 24,000 + 8,000 = 32,000. Therefore, the plantwide overhead rate using machine hours would be $156,000 ÷ 32,000 = $7.43 per machine hour.

The Ramapo Company Produces Two Products, Blinks and Dinks