Question

Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for the current year is: a. $6.50 per machine hour b. $8.13 per machine hour c. $7.00 per machine hour d. $8.75 per machine hour

Answer 1

Answer: Plantwide factory overhead rate for the current year is $7.00 per machine hour.

Step-by-step explanation:

Given that,

Budgeted overhead cost for the current year = $700,000

Actual overhead costs for the year = $650,000

Budgeted machine hours = 100,000 hours

Actual machine hours = 80,000 hours

Total units budgeted to be produced = 100,000 units

Total units actually produced = 98,000 units

Plantwide factory overhead rate for the current year is:

=
`(Budgeted\ Overhead\ Cost\ in\ current\ year)/(Budgeted\ machine\ hours)`

=
`(700000)/(100000)`

= $7.00 per machine hour