Yousef Ibrahim manages a plastics plant. He has provided you with the following data.

Yousef believes that the factory has a practical capacity of 25,000 machine hours. He wants to determine the full cost of a machine hour to use in determining his product mix over the next two to three years.

Required:
Forming a cost pool that contains all machine related costs in the above accounts, compute the overhead rate per machinehour.

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Tools, jigs and fixtures Machine operators Oils, coolants and lubricants 67,50 Factory power 650,000 Traceable to individual products 240000 Salaried employees Reqied to operate machines 125,000 30% is used for general heating and lighting Although the average machine lasts many years, Yousef spends considerable amounts to replace worn-out machines each year 60% occupied by various machines. The plant is in year 3 of a 10-year lease Machine depreciation $1,200,000 Factory lease 144,000 Total costs $2,436,500