Yellow Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Question

Quizplus · Accepted Answer

The question does not provide any information on the amount of overhead cost, but it does provide the total amount of machine hours used in the plant. Therefore, we can use the formula:

Plantwide overhead rate = Total overhead cost / Total machine hours

Since we do not have the total overhead cost, we cannot calculate the overhead rate. However, the question asks for the amount of machine hours estimated per unit of product RST. To calculate this, we need to know the amount of overhead cost and the amount of machine hours used for each unit of product RST.

We do know that the plantwide overhead rate is based on machine hours, so we can assume that the amount of machine hours estimated per unit of product RST will be the same as the amount of machine hours used for the entire plant.

Total machine hours = 4,000 + 1,000 + 5,000 = 10,000

Machine hours estimated per unit of RST = Total machine hours / Number of units of RST produced

Machine hours estimated per unit of RST = 10,000 / 500 = 20

Therefore, the best choice is option C, which is 20 MH per unit of RST.

Yellow Company Uses a Plantwide Overhead Rate with Machine Hours