Compute standard overhead allocation rates (Learning Objective 3)

McDonald’s supplies its restaurants with many premanufactured ingredients (such as bags of frozen french fries), while other ingredients (such as lettuce and tomatoes) are obtained from local suppliers. Assume that the manufacturing plant processing the fries anticipated incurring a total of $3.080.000 of manufacturing overhead dur¬ ing the year. Of this amount, $1,320,000 is fixed. Manufacturing overhead is allo¬ cated based on machine hours. The plant anticipates running the machines 220,000 hours next year.

1. Compute the standard variable overhead rate.

2. Compute the fixed overhead rate.

3. Compute the standard total overhead rate.