Question

Ricky Corp. budgeted $700,000 of ovechead cost for the current jeit, Actual orethesd cores for the year were $650,000. Pinnacle's plantwide allocation base, machine bours, was budgeted at 100,000 bouss. Actual machine bours were 80,000 . A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Ricky's plantwide factory orerhead nte for the current year is A. $6.50 per machine hour B. $7.00 per machine hour C. $8.75 per machine bour D. $8.13 per machine bour

Answer 1

The plantwide factory overhead rate for Ricky Corp is $7.00 per machine hour, calculated by dividing the budgeted overhead costs by the budgeted machine hours.

Step-by-step explanation:

To calculate Ricky Corp's plantwide factory overhead rate for the current year, we divide the budgeted overhead cost by the budgeted machine hours. The budgeted overhead cost is $700,000 and the budgeted machine hours are 100,000 hours. Therefore, the overhead rate is calculated as $700,000 ÷ 100,000 hours = $7.00 per machine hour. This calculation assumes a plantwide allocation where a single overhead rate is used across all departments and products, and does not take actual overhead costs or hours into consideration.