A company estimates that overhead costs for the next year will be $3,600,000 for indirect labor, $200,000 for factory utilities, and $21,500 for depreciation on factory machinery. The company uses machine hours as its overhead allocation base. If 764,300 machine hours are planned for this next year, what is the company's plantwide overhead rate?
What will be an ideal response?
($3,600,000 + $200,000 + $21,500)/764,300 MH = $5 per MH
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