Gray Company Uses a Plantwide Overhead Rate with Machine Hours

question 169

Multiple Choice

Gray 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 Q.

• A)50 MH per unit of Q.
• B)0.50 MH per unit of Q.
• C)0.75 MH per unit of Q.
• D)17.5 MH per unit of Q.
• E)30 MH per unit of Q.

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Definitions:

Finished Goods

Items that are finished being made but have not been purchased by consumers yet.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods that a company sold during a specific period.

Direct Labor Hours

The total hours of labor directly involved in producing goods or providing services, used in calculating labor costs and efficiency.

Period Costs

Expenses on the income statement not directly tied to the production of goods, such as administrative and selling expenses.