17 April, 21:21

# Kata Systems allocates manufacturing overhead based on machine hours. Each connector should require 5 machine hours. According to the static budget, Kata expected to incur the following: nbsp 400 machine hours per month (80 connectors x 5 machine hours per connector) \$ 8 comma 000 in variable manufacturing overhead costs \$ 5 comma 325 in fixed manufacturing overhead costs During August, Kata actually used nbsp 500 machine hours to make 85 connectors and spent \$ 5 comma 300 in variable manufacturing costs and \$ 6 comma 000 in fixed manufacturing overhead costs. Kata's standard variable manufacturing overhead allocation rate is A. \$ 33.31 per machine hour. B. \$ 20.00 per machine hour. C. \$ 13.31 per machine hour. D. \$ 16.00 per machine hour.

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1. 17 April, 21:52
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C. \$ 13.31 per machine hour.

Explanation:

Standard variable manufacturing overhead allocation rate is calculated by dividing the Budgeted overhead by the Budgeted level of activity on which the overhead is allocated. It is a rate at which the overhead is allocated to a product / project / department.

First we need to calculate the standard variable manufacturing overhead allocation rate using machine hours.

Standard variable manufacturing overhead allocation rate = Budgeted overheads / budgeted Machine hours

Standard variable manufacturing overhead allocation rate = \$5,325 / 400 machine hours

Standard variable manufacturing overhead allocation rate = \$13.3125 per machine hour

Standard variable manufacturing overhead allocation rate = \$13.31 per machine hour