6. Manufacturing overhead is allocated to products based on the number of machin

Question

6.

Manufacturing overhead is allocated to products based on the number of machine hours required. In a year when 20,000 machine hours were anticipated, costs were budgeted at $125,000. If a product requires 8,000 machine hours, how much manufacturing overhead will be allocated to this product?

A)

$41,667

B)

$31,120

C)

$43,750

D)

$50,000

6.

Manufacturing overhead is allocated to products based on the number of machine hours required. In a year when 20,000 machine hours were anticipated, costs were budgeted at $125,000. If a product requires 8,000 machine hours, how much manufacturing overhead will be allocated to this product?

A)

$41,667

B)

$31,120

C)

$43,750

D)

$50,000

Explanation / Answer

The correct answer is D) $ 50,000.

The budgeted machine hour rate is $ 125,000/ 20,000 hours = $ 6.25 per machine hour.

Therefore, if a product requires 8,000 machine hours, the manucturing overhead allocated to this product is $ 8000 x 6.25 = $ 50,000

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