For 2018, Rest-Well Bedding Uses Machine-Hours as the Only Overhead

question 10

Multiple Choice

For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000.
Using job costing, the 2018 actual indirect-cost rate is ________.

• A) $7.00 per machine-hour
• B) $5.50 per machine-hour
• C) $8.75 per machine-hour
• D) $8.50 per machine-hour

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Definitions:

Mailing Days

The days that are considered when calculating the time it will take for mail and packages to be delivered.

Bank Deposit

Money placed into a banking institution for safekeeping, which can earn interest depending on the type of account.

Weighted Average Float

Weighted average float refers to the average time between when a check is deposited in a bank and when the funds are made available, weighted by the value of each check.

Clearing Times

The period it takes for a transaction to be processed, confirmed, and settled between buyer and seller in the financial markets.