For 2018, Winters Manufacturing uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $2.00 per unit. The selling price of the product is $27.00. The estimated manufacturing overhead costs are $220,000 and estimated 20,000 machine hours. The actual manufacturing overhead costs are $225,000 and actual machine hours are 25,000. What is the profit margin earned if each unit requires two machine-hours?
A) 45.00%
B) 25.93%
C) 50.00%
D) 90.00%

Question

Quizplus · Accepted Answer

$225,000/25,000 = $9.00
$27.00 - $2.00 ? ($9.00 × 2) = $7; $7 / $20 = 25.93% *already there/no change to this

For 2018, Winters Manufacturing Uses Machine-Hours as the Only Overhead