Question

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the...

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Direct material cost per unit of RST $ 28
Total estimated manufacturing overhead $ 326,000
Total cost per unit of RST $ 93
Total estimated machine hours 163,000 MH
Direct labor cost per unit of RST $ 36

Multiple Choice

  • 14.50 MH per unit of RST.

  • 2.00 MH per unit of RST.

  • 23.25 MH per unit of RST.

  • 62.50 MH per unit of RST.

  • 64.00 MH per unit of RST.

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Answer #1

Estimated manufacturing overhead per unit = Total cost per unit of RST - Direct material cost per unit of RST - Direct labor cost per unit of RST

= $93 - $28 - $36

= $29 per unit

Estimated manufacturing overhead per MH = Total estimated manufacturing overhead /Total estimated machine hours

= $326,000 / 163,000

= $2 per MH

Machine hours estimated per unit = Estimated manufacturing overhead per unit / Estimated manufacturing overhead per MH

= $29 / $2

= 14.50  MH per unit of RST

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