Heip Saver EXT Sub West Company estimates that overhead cost

Heip Save&r; EXT Sub West Company estimates that overhead costs for the next year will be $5,240,000 for indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 150,000 machine hours are planned for this next year, what is the company\'s plantwide overhead rate? Multiple Choice $.0259 per machine hour. $34.93 per machine hour. $38.60 per machine hour. $3.67 per machine hour

Solution

Company\'s Plant wide overhead rate :

= (5,240,000+550,000)/150,000

= 38.60 per machine hour