Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 900 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide overhead rate to allocate its $8,597,000 of annual manufacturing overhead. Of this amount, $2,270,000 is associated with the Large Bag line, $3,420,000 is associated with the Medium Bag line, and $2,907,000 is associated with the Small Bag line. Cooper's Bags Company is currently running a total of 35,000 machine hours: 12,100 in the Large Bag line, 14,500 in the Medium Bag line, and 8400 in the Small Bag line. Cooper's Bags Company uses machine hours as the cost driver for manufacturing overhead costs. The departmental manufacturing overhead rate for the Small Bag line would be closest to

Question

Quizplus · Accepted Answer

The departmental manufacturing overhead rate for the Small Bag line is calculated by dividing the overhead costs associated with the Small Bag line ($2,907,000) by the machine hours for the Small Bag line (8,400 hours), resulting in approximately $346.07 per machine hour.

Cooper's Bags Company Manufactures Cloth Grocery Bags to Be Sold