Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.
A) 21 MH per unit of RST.
B) 2 MH per unit of RST.
C) 20 MH per unit of RST.
D) 37.5 MH per unit of RST.
E) 38 MH per unit of RST.
A) 21 MH per unit of RST.
Explanation: Total cost per unit of RST:
$80 = DM + DL + OH
$80 = $15 + $23 + X
X = $42 overhead per unit of RST
Plantwide overhead rate: $300,000/150,000 MH = $2 per MH
MH per unit of RST: $42/$2 = 21 MH per unit of RST
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