(Appendix 11A)Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20, 000 machine-hours: During June, 17, 000 machine-hours were used to complete 13, 000 units of product, and the following actual total overhead costs were incurred: At standard, each unit of finished product requires 1.4 hours of machine time. The total predetermined overhead rate per machine-hour for June was:
A)$2.57 per machine-hour
B)$1.30 per machine-hour
C)$2.80 per machine-hour
D)$3.15 per machine-hour

Question

(Appendix 11A)Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours.For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20, 000 machine-hours:  During June, 17, 000 machine-hours were used to complete 13, 000 units of product, and the following actual total overhead costs were incurred:  At standard, each unit of finished product requires 1.4 hours of machine time. The total predetermined overhead rate per machine-hour for June was:
A)$2.57 per machine-hour 
B)$1.30 per machine-hour 
C)$2.80 per machine-hour 
D)$3.15 per machine-hour

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = ($16, 000 + $10, 000 + $20, 500 + $9, 500)÷ 20, 000 machine-hours
= $56, 000 ÷ 20, 000 machine-hours = $2.80 per machine-hour

(Appendix 11A)Pohl Corporation Uses a Standard Cost System in Which