For 2018, Rest-Well Bedding Uses Machine-Hours as the Only Overhead

Multiple Choice

For 2018, Rest-Well Bedding uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $6.00 per unit. The selling price of the product is $21.00. The estimated manufacturing overhead costs are $275,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $350,000 and actual machine hours are 50,000.
Using job costing, the 2018 actual indirect-cost rate is ________.

A) $7.00 per machine-hour
B) $5.50 per machine-hour
C) $8.75 per machine-hour
D) $8.50 per machine-hour