Western Company allocates $10.00 overhead to each unit produced. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

Estimated: Department 1 Department 2

Manufacturing overhead costs $250,000 $150,000

Direct labor hours 8,000 DLH 12,000 DLH

Machine hours 15,000 MH? MH

a. 33,000 MH

b. 137,500 MH

c. 82,500 MH

d. 25,000 MH

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Business

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11 October, 16:53

Western Company allocates $10.00 overhead to each unit produced. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

Estimated: Department 1 Department 2

Manufacturing overhead costs $250,000 $150,000

Direct labor hours 8,000 DLH 12,000 DLH

Machine hours 15,000 MH? MH

a. 33,000 MH

b. 137,500 MH

c. 82,500 MH

d. 25,000 MH

+3

Answers (1)

Know the Answer?

Paisley Espinoza · Answer 1

The correct answer is D.

Explanation:

Giving the following information:

Western Company allocates $10.00 overhead to each unit produced. The company uses a plantwide overhead rate with machine hours as the allocation base.

Estimated: Department 1 Department 2

Manufacturing overhead costs $250,000 $150,000

Machine hours 15,000 MH?

We will sum the total overhead and divide it by the overhead rate. Doing this we will determine the total number of machine-hours.

Total machine-hours = 400,000/10 = 40,000 hours

Department 2 = total machine hours - department 1 machine hours

D2 = 40,000 - 15,000 = 25,000 machine hours