Question

8) Green Energy Inc. produces fertilizer and distributes the product by using his tanker trucks. Green Energy uses budgeted fleet hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

Budgeted output units 730 truckloads
Budgeted fleet hours 511 hours
Budgeted pounds of fertilizer 24,000,000 pounds
Budgeted variable manufacturing overhead costs for 730 loads $89,425

Actual output units produced and delivered 720 truckloads
Actual fleet hours 436 hours
Actual pounds of fertilizer produced and delivered 25,200,000 pounds
Actual variable manufacturing overhead costs $87,120

What is the budgeted variable overhead cost rate per output unit?
A) $120.00
B) $122.50
C) $123.69
D) $121.00

Answer 1

The budgeted variable overhead cost rate per output unit is $122.50. Correct option is B.

Step-by-step explanation:

The budgeted variable overhead cost rate per output unit can be calculated by dividing the budgeted variable manufacturing overhead costs by the budgeted output units. In this case, the budgeted variable manufacturing overhead costs for 730 loads is $89,425. Dividing this by 730 loads gives us a rate of approximately $122.85. Therefore, the correct answer is B) $122.50.