Aztec Industries produces bread which goes through two operations, Mixing and Baking, before it is ready to be packaged. Next year’s expected costs and activities are shown below.

 Aztec Industries produces bread which goes through two operations, Mixing and Baking, before it is ready to be packaged. Next year’s expected costs and activities are shown below.

 
     Mixing    Baking
Direct labor hours    400,000    DLH    80,000    DLH
Machine hours    800,000    MH    800,000    MH
Overhead costs    $ 600,000         $ 400,000    
 
Compute Aztec's departmental overhead rate for the Baking department based on machine hours.
Multiple Choice
•    
$1.50 per MH
•    
$5.00 per MH
•    
$0.75 per MH
•    
$0.50 per MH
•    
$2.08 per MH

Answer

$0.50 per MH

Explanation

$400,000/800,000 = 0.50 per MH

A company budgets overhead cost of $8,727,500 for the next year. The company uses machine hours as its overhead allocation base. If 520,000 machine hours are planned for the next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)
Multiple Choice
•    
$0.06 per machine hour.
•    
$16.78 per machine hour.
•    
$16.46 per machine hour.
•    
$0.32 per machine hour.
•    
$3.10 per machine hour.

Answer
$16.78 per machine hour

Explanation

$8,727,500 /520,000 = 16.78

 
Peterson Company budgets overhead cost of $4,770,000 for the next year. The company uses machine hours as its overhead allocation base. If 106,000 machine hours are planned for the next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)
Multiple Choice
•    
$0.03 per machine hour.
•    
$45.00 per machine hour.
•    
$35.47 per machine hour.
•    
$9.15 per machine hour.
•    
$0.11 per machine hour.

Answer

 $45.00 per machine hour

 Explanation

 $4,770,000/106,000 = 45