Felton Quality Productions Uses a Predetermined Overhead Allocation Rate Based

question 144

Multiple Choice

Felton Quality Productions uses a predetermined overhead allocation rate based on machine hours. It has provided the following information for the year: $$\begin{array} { | l | r | } \hline \text { Actual manufacturing overhead costs incurred } & \$ 100,000 \\\hline \text { Manufacturing overhead costs allocated to production } & \$ 42,000 \\\hline \text { Actual direct materials cost } & \$ 220,000 \\\hline \text { Actual direct labor cost } & \$ 50,000 \\\hline \text { Actual machine hours } & 32,000 \text { hours } \\\hline\end{array}$$ Based on the above information, calculate the predetermined overhead allocation rate applied by Felton Quality. (Round your answer to the nearest cent.)

• A) $1.31 per machine hour
• B) $3.13 per machine hour
• C) $6.88 per machine hour
• D) $1.56 per machine hour

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Definitions:

Total Cost

The total expense incurred in the production of goods or services, including both fixed and variable costs.

Computer Software

Software and data that enable a computer to execute particular tasks.

Opportunity Cost

The sacrifice of possible benefits from other options when selecting a specific one.

Income Tax

A tax levied by governments on individuals' or entities' income and earnings.