Pinacle Corp

question 109

Multiple Choice

Pinacle Corp. budgeted $350,000 of overhead cost for 2012. Actual overhead costs for the year were $325,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 50,000 hours. Actual machine hours were 40,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for 2012 is:

• A) $8.13 per machine hour
• B) $7.00 per machine hour
• C) $6.50 per machine hour
• D) $8.75 per machine hour

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Definitions:

Non-Value-Added

Activities or processes that consume resources but do not add value to the product or service from the customer's perspective.

Total Lead Times

The aggregate time taken from the initiation of a process until its completion, often used in manufacturing to describe the period from ordering materials to the final product delivery.

Value-Added Ratio

The proportion of time spent on non-waste activities in the production process.

Appraisal Cost

A quality control cost incurred to identify defective products before they are shipped to customers, including costs of inspections and testing.