Anton believes his company's overhead costs are driven (affected)by the number of machine hours because the production process is heavily automated.During the period,the company produced 3,000 units of Product A requiring a total of 100 machine hours and 2,000 units of Product B requiring a total of 25 machine hours.What allocation rate should be used if the company incurs overhead costs of $10,000?
A) $2 per unit
B) $2 per machine hour
C) $80 per unit
D) $80 per machine hour

Question

Quizplus · Accepted Answer

The allocation rate is calculated by dividing the total overhead costs by the total machine hours. $10,000 / (100 + 25) machine hours = $80 per machine hour.

Anton Believes His Company's Overhead Costs Are Driven (Affected)by the Number