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Single Plantwide Factory Overhead Rate Kennedy Appliance Inc.’s Machining Department incurred $83,200 of factory overhead cost in producing hoses and valves. The two products consumed a total of 3,200 direct machine hours. Of that amount, hoses consumed 1,300 direct machine hours. Determine the total amount of factory overhead that should be allocated to hoses using machine hours as the allocation base. $

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TomShelby

Answer:

applied overhead to hoses: 33,800

Explanation:

We calculate the rate by dividing the expected overhead over the cost driver:

[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]

In this case, machine hours is the cost driver:

83,200 / 3,200 = 26

now applied ovehead:

machine hours x     rate

         1,300        x    26   = 33,800

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