Answer:
b. $50.50 per machine hour.
Explanation:
Overhead costs are defined as the amount that is spent by a business that is not directly contributing to the product. For example overhead can be labour cost, rent, utilities, and insurance.
These do not contribute directly to the product. Direct cost such as are materials contribute directly to the product.
In the case the overhead costs are given as $6,520,000 for indirect labor and $550,000 for factory utilities.
Total overhead= 6,520,000 + 550,000
Total overhead= $7,070,000
Overhead Cost per hour= Total overhead ÷ Total machine hours
Overhead cost per hour= 7,070,000 ÷ 140,000= $50.50
Answer:
The correct option is B,$50.50
Explanation:
The company's plantwide overhead rate is computed by dividing total budgeted overhead costs by the planned machine hours which is the overhead allocation base:
Plantwide overhead rate=Total budgeted overhead/machine hours
total budgeted overhead =$6,520,000+$550,000
=$7,070,000
budgeted machine hours is 140,000 hours
plantwide overhead rate=$7,070,000/140,000
=$50.50
