Question
ABC Company estimates total overhead costs at $1,500,000 and will apply overhead to units produced based on 200,000 estimated machine hours. During the year, ABC
ABC Company estimates total overhead costs at $1,500,000 and will apply overhead to units produced based on 200,000 estimated machine hours. During the year, ABC Company incurred actual overhead costs of $1,250,000 and achieved 250,000 machine hours. ABC Company's predetermined overhead rate is?
Answer: C. 6.00 but their explanation was this (MOH application rate = $1,500,000 estimated costs/200,000 estimated MH = $7.50/MH)
However, the given choices were:
a. 6.25 per machine hour
b. 5.00 per machine hour
c. 6.00 per machine hour
d. 4.80 per machine hour
I don't understand how they got $6.00?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started