Question

Total manufacturing overhead for the year is estimated to be $752,000 and is allocated based on machine hours, which are expected to be 800,000 hours for the year. Variable manufacturing overhead is expected to be $600,000 for the year. The standard machine hours per gadget is 15. What is the standard fixed manufacturing overhead cost per gadget

Answer 1

$2.85

Step-by-step explanation:

The computation of the standard fixed manufacturing overhead cost per gadget is shown below:

= (Fixed manufacturing overhead ÷ expected hours) × standard machine hours per gadget

= ($152,000 ÷ 800,000 hours) × $15

= $0.19 × $15

= $2.85

The fixed manufacturing overhead is computed below:

= $752,000 - $600,000

= $152,000