Question

A company estimates that overhead costs for the next year will be $8,500,000 for indirect labor and $164,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 490,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

Answer 1

$17.68 per machine hour.

Step-by-step explanation:

Plant Overhead rate per machine hour = $8,500,000 + $164,500 / 490,000 machine hours

Plant Overhead rate per machine hour = $8,664,500 / 490,000 machine hours

Plant Overhead rate per machine hour = $17.68265306122449

Plant Overhead rate per machine hour = $17.68 per machine hour.