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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
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