A company estimates that overhead costs for the next year will be $9,858,000 for

Question

A company estimates that overhead costs for the next year will be $9,858,000 for indirect labor and $328,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 550,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round to two decimal places)

A company estimates that overhead costs for the next year will be $9,858,000 for indirect labor and $328,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 550,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round to two decimal places)

Explanation / Answer

the company's plantwide overhead rate=overhead costs $9,858,000 for indirect labor +$328,000 for factory utilities/550,000 machine hours =$18.52 per unit.

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