This Question: 2 pts 7 of 9 (o complete) ? | ? This Quiz: 20 pts po. Hermetic Sy

Question

This Question: 2 pts 7 of 9 (o complete) ? | ? This Quiz: 20 pts po. Hermetic Systems allocates manufacturing overhead based on machine hours. Each connector should require 10 machine hours. According to the static budget, Hermetic expected to incur the following 600 machine hours per month (60 connectors x 10 machine hours per connector) $7,500 in variable manufacturing overhead costs $6,525 in fixed manufacturing overhead costs During August, Hermetic actually used 2,000 machine hours to make 92 connectors and spent $5,900 in variable manufacturing costs and $8,800 in fixed manufacturing overhead costs. Hermetic's standard variable manufacturing overhead allocation rate is O A. $10.88 per machine hour O B. $23.38 per machine hour ° C. $3.75 per machine hour. O D. $12.50 per machine hour

Explanation / Answer

Standard variable manufacturing overhead allocation rate:

= Expected variable overhead/Expected machine hours

= $7,500/600 machine hours

= $12.50 per machine hour

Hence, correct option is (D) $12.50 per machine hour

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