Use information below to answer the following questions.
Osborne Ltd manufactures a wide range of leather suitcases. The following costs are expected to be incurred by the company during May:
-Refer to the table above. The management accountant at Osborne Ltd wants to revise his estimates and use machine hours as the allocation base to determine the overhead recovery rate. The revised overhead recovery rate (rounded) per machine hour (MH) will be:

Question

Use information below to answer the following questions.
Osborne Ltd manufactures a wide range of leather suitcases. The following costs are expected to be incurred by the company during May: 
-Refer to the table above. The management accountant at Osborne Ltd wants to revise his estimates and use machine hours as the allocation base to determine the overhead recovery rate. The revised overhead recovery rate (rounded) per machine hour (MH) will be:

Quizplus · Accepted Answer

To calculate the overhead recovery rate using machine hours as the allocation base, we need to divide the total expected overhead costs by the total expected machine hours. 
Total expected overhead costs = $405,000 + $90,000 = $495,000 
Total expected machine hours = 45,000 + 15,000 = 60,000 
Overhead recovery rate per machine hour = Total expected overhead costs ÷ Total expected machine hours = $495,000 ÷ 60,000 MH = $8.25 per MH (rounded to the nearest cent) 
Therefore, the correct answer is C as it is the closest option to the answer calculated above.

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