Question

Western Company allocates $10 overhead to products based on the number of machine hours used. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

Answer 1

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Explanation:

Total estimated machine hours

= Total manufacturing overhead / Plantwide predetermined overhead rate

= ( 255000 + 155000 ) / 10.00

= 41000 MH

Machine hours expected in Department 2

= Total estimated machine hours - Machine hours of Department 1

= 41000 - 15500

= 25500 MH