Question

Consider the following information attributed to the material management departmentBudgeted usage of materials-handling labor-hours 3,400 Budgeted cost​ pools: Fixed costs: $146,200 Variable costs: $108,800 ​(3,400 hours x $ 32 per​ hour) The company uses the singleminusrate method to allocate support costs to the Machining and Assembly Departments. Assuming that the actual hours tracked in the Machining and Assembly department are 430 for the​ month, what would be the allocation rate and how much cost would be allocated to the Machining and Assembly Department for the operations of the​ month? (Round final answers to the nearest​ dollar.) a. $75 an hour for a total of $32,250 b. $32 an hour for a total of $32,250 c. $32 an hour for a total of $13,760 d. $ 593 an hour for a total of $75

Answer 1

a. $75 an hour for a total of $32,250

Step-by-step explanation:

The computation of the allocation rate and how much cost is to be allocated is shown below:

Fixed cost per hour = $146,200 ÷ 3,400 hours = $43

Variable cost per hour = $32

So, the total cost per hour equal to

= Fixed cost per hour + Variable cost per hour

= $43 + $32

= $75

And, the total cost allocated is

= 430 hours × $75

= $32,250