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On January 1, Powers Publishing estimated their manufacturing overhead cost to be $400,000 and estimated that...

On January 1, Powers Publishing estimated their manufacturing overhead cost to be $400,000 and estimated that the would produce 125,000 units. On December 31, Powers Publishing recorded that $425,000 was spent on manufacturing overhead throughout the year and that they produced 120,000 units. If they use the plantwide method of allocating overhead on the basis of units, what is the allocation rate (MOH Rate) they would use? (Answers are rounded to nearest penny.)

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Answer:
Plantwide Overhead Rate = Estimated Manufacturing Overhead / Estimated Allocation base
Plantwide Overhead Rate = $400,000 / 125,000
Plantwide Overhead Rate = $3.20 per Unit produced

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