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14 August, 16:38

Stones Corporation uses a predetermined overhead rate based on machine-hours to apply overhead to the manufacturing process. Last year, Stones incurred manufacturing overhead costs totaling $450,000 and used 100,000 machine-hours. This year, Stones estimated manufacturing overhead to be $550,000 and expected to incur 110,000 machine-hours. Stones actually incurred $575,000 of manufacturing overhead and incurred 120,000 machine-hours this year. What is the manufacturing overhead application rate?

A. $5.00 per machine-hour

B. $4.79 per machine-hour

C. $4.50 per machine-hour

D. $5.50 per machine-hour

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  1. 14 August, 16:55
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    A. $5.00 per machine-hour

    Explanation:

    The computation of the manufacturing overhead application rate is shown below:

    = Estimated manufacturing overhead : expected machine-hours incurred

    = $550,000 : 110,000 machine hours

    = $5.00 per machine hour

    In order to determine the manufacturing overhead application rate, basically we divided the estimated manufacturing overhead by the expected machine hours
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