Question

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

Budgeted output units 43,500 units
Budgeted machine-hours 17,400 hours
Budgeted variable manufacturing overhead costs for 17,400 units $382,800
Actual output units produced 47,500 units
Actual machine-hours used 15,100hours
Actual variable manufacturing overhead costs $387,518

What is the amount of the budgeted variable manufacturing overhead cost per unit? (Do not round any intermediary calculations. Round your final answer to the nearest cent.)

Answer 1

The budgeted variable manufacturing overhead cost per unit for Majestic Corporation is $8.80. Using the provided information, Majestic Corporation's budgeted variable manufacturing overhead costs amount to $382,800 for 17,400 machine hours, which are to be allocated over 43,500 units.

Step-by-step explanation:

To calculate the budgeted variable manufacturing overhead cost per unit, we divide the total budgeted variable manufacturing overhead costs by the number of budgeted output units. Using the provided information, Majestic Corporation's budgeted variable manufacturing overhead costs amount to $382,800 for 17,400 machine hours, which are to be allocated over 43,500 units.

The calculation will be as follows:

Budgeted variable manufacturing overhead cost per unit = Budgeted variable manufacturing overhead costs ÷ Budgeted output units

=$382,800 ÷ 43,500 units

= $8.80 per unit (rounded to the nearest cent)

It is added to the cost of the final product along with the direct material and direct labor costs. Usually manufacturing overhead costs include depreciation of equipment, salary and wages paid to factory personnel and electricity used to operate the equipment.