Safa Visual Works,Inc.estimated its overhead costs for the current year to be as follows: fixed,$175,000;variable,$4 per unit.Safa expected to produce 350,000 units during the year.During the year,the company incurred overhead costs of $1,600,000 and produced 400,000 units.Calculate the rate to be used to apply manufacturing overhead costs to products.

Question

Quizplus · Accepted Answer

The rate to be used to apply manufacturing overhead costs to products is calculated as follows:

Total overhead costs / Total number of units produced

= ($175,000 fixed overhead costs + $4 per unit x 350,000 units) / 350,000 units

= $1,525,000 / 350,000 units

= $4.357 per unit

Therefore, the answer is B, $4.50, because it is the closest option to the calculated rate.