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awalhi Company uses machine-hours (MHs) to allocate their manufacturing overhead (MOH hod. The company recognized the cost of unused (idle) capacity of $600 on the income statem owing information, how much was the company's estimated MHs for planned production last y 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

awalhi Company uses machine-hours (MHs) to allocate their manufacturing overhead (MOH hod. The company recognized the cost of unused (idle) capacity of $600 on the income statem owing information, how much was the company's estimated MHs for planned production last y 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

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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I dont understand the part that I highlight with red. Also, form where the 60 amount is coming from 

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
Step 1 POHR using traditional method =estimated MOH cost /estimated MHs for planned production Step 2 12 = estimated MOH cost /estimated MHs for planned production estimated MOH cost = 12* estimated MHs for planned production using POHR at capacity =estimated MOH cost /estimated MHs at capacity 10 = estimated MOH cost /estimated MHs at capacity estimated MOH cost = 10 * estimated MHs at capacity 12 * estimated MHs for planned production =10 * estimated MHs at capacity 12* estimated MAS for planned production сарacity) =10 *( estimated MHs at planned production + unused 12 * estimated MHs for planned production =10 *( estimated MHs at planned producton + 60) 2* estimated MHs for planned production =600 estimated MHs for planned production =300 hour ce correct answer is option c. 300 MHs.
Transcribed Image Text:Step 1 POHR using traditional method =estimated MOH cost /estimated MHs for planned production Step 2 12 = estimated MOH cost /estimated MHs for planned production estimated MOH cost = 12* estimated MHs for planned production using POHR at capacity =estimated MOH cost /estimated MHs at capacity 10 = estimated MOH cost /estimated MHs at capacity estimated MOH cost = 10 * estimated MHs at capacity 12 * estimated MHs for planned production =10 * estimated MHs at capacity 12* estimated MAS for planned production сарacity) =10 *( estimated MHs at planned production + unused 12 * estimated MHs for planned production =10 *( estimated MHs at planned producton + 60) 2* estimated MHs for planned production =600 estimated MHs for planned production =300 hour ce correct answer is option c. 300 MHs.
Expert Solution
Step 1

The company currently uses capacity based machine hrs to allocate their manufacturing overhead

The rate for capacity based machine hrs is $ 10 , and income statement shows and unused capacity of $ 600 

Therefore the unused capacity in machine hours = 60 Hours ($ 600/10)

Capacity based machine hours = Planned machine hrs + unused capacity in machine hours

 

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