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16 Hurawalhi Company uses machine-hours (MHs) to allocate their manufacturing overhead (MOH) cost with capacity-based method. The company recognized the cost of unused (idle) capacity of $600 on the income statement last year. Given the following information, how much was the company's estimated MHs for planned production last year? Estimated MOH cost (all fixed) Estimated MHs for planned production Estimated MHs at capacity POHR using the traditional method POHR at capacity $ ? ? MHs ? MHs 12 per MH $ 10 per MH A. 72 MHs В. 250 MHs C. 300 MHs D. 350 MHs Е. 360 MHs

16 Hurawalhi Company uses machine-hours (MHs) to allocate their manufacturing overhead (MOH) cost with capacity-based method. The company recognized the cost of unused (idle) capacity of $600 on the income statement last year. Given the following information, how much was the company's estimated MHs for planned production last year? Estimated MOH cost (all fixed) Estimated MHs for planned production Estimated MHs at capacity POHR using the traditional method POHR at capacity $ ? ? MHs ? MHs 12 per MH $ 10 per MH A. 72 MHs В. 250 MHs C. 300 MHs D. 350 MHs Е. 360 MHs

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 7EA: A company estimates its manufacturing overhead will be $750,000 for the next year. What is the...
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16 Hurawalhi Company uses machine-hours (MHs) to allocate their manufacturing overhead (MOH) cost with capacity-based method. The company recognized the cost of unused (idle) capacity of $600 on the income statement last year. Given the following information, how much was the company's estimated MHs for planned production last year? Estimated MOH cost (all fixed) $ Estimated MHs for planned production Estimated MHs at capacity ? MHs ? MHs $ 12 per MH $ 10 per MH POHR using the traditional method POHR at capacity А. 72 MHs В. 250 MHs С. 300 MHs D. 350 МHs E. 360 MHs
Transcribed Image Text:16 Hurawalhi Company uses machine-hours (MHs) to allocate their manufacturing overhead (MOH) cost with capacity-based method. The company recognized the cost of unused (idle) capacity of $600 on the income statement last year. Given the following information, how much was the company's estimated MHs for planned production last year? Estimated MOH cost (all fixed) $ Estimated MHs for planned production Estimated MHs at capacity ? MHs ? MHs $ 12 per MH $ 10 per MH POHR using the traditional method POHR at capacity А. 72 MHs В. 250 MHs С. 300 MHs D. 350 МHs E. 360 MHs
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Formula used

Plant wide overhead rate   is denoted by (POHR)

POHR using traditional method =estimated MOH cost /estimated MHs for planned production

POHR at capacity                              =estimated MOH cost /estimated MHs at capacity

Estimated MHS at capacity           =estimated MHs at planned production + unused capacity

 

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