Healthy Earth Products Inc. produces fertilizer and distributes the product by using company trucks. The controller of the company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the budgeted variable overhead cost rate per output unit?

Question

Healthy Earth Products Inc. produces fertilizer and distributes the product by using company trucks. The controller of the company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the budgeted variable overhead cost rate per output unit?

Quizplus · Accepted Answer

Budgeted fleet hours per unit = 520 ÷ 800= 0.65
Budgeted cost per fleet hour = $93,600.00 ÷ 520 = $180
Budgeted cost per unit = $180 × 0.65 = $117.00