The Burgers 4 Upper U Restaurant Group supplies its franchise restaurants with many pre-manufactured ingredients (such as bags of frozen French fries), while other ingredients (such as lettuce and tomatoes) are sourced locally. Assume that the manufacturing plant processing the fries anticipated incurring a total of $ 5 comma 198 comma 000 of manufacturing overhead during the year. Of this amount, $ 2 comma 486 comma 000 is fixed. Manufacturing overhead is allocated based on machine hours. The plant anticipates running the machines 226 comma 000 hours next year.

Compute the standard variable overhead rate.

Question

Jaycee Bolton

Business

4 April, 19:00

The Burgers 4 Upper U Restaurant Group supplies its franchise restaurants with many pre-manufactured ingredients (such as bags of frozen French fries), while other ingredients (such as lettuce and tomatoes) are sourced locally. Assume that the manufacturing plant processing the fries anticipated incurring a total of $ 5 comma 198 comma 000 of manufacturing overhead during the year. Of this amount, $ 2 comma 486 comma 000 is fixed. Manufacturing overhead is allocated based on machine hours. The plant anticipates running the machines 226 comma 000 hours next year.

Compute the standard variable overhead rate.

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Efrain Richardson · Answer 1

variable overhead rate 11.96 dollars

Explanation:

5,189,000 manufacturing overhead from which:

2,486,000 are fixed so:

variable overhead: 5,189,000 - 2,486,000 = 2,703,000

this overhead is generated from machine hours thus we divide the expected overhead over the machine hours to know the rate.

2,703,000 / 226,000 = 11.96017699 = $ 11.96 variable overhead rate