Total overhead cost at machine hours


Problem:

Reddy Company has the following cost formulas for overhead:

Cost Cost Formula

Indirect materials    $2,000 plus $0.40 per machine hour
Maintenance           $1,500 plus $0.60 per machine hour
Machine setup        $0.30 per machine hour
Utilities                  $200 plus $0.10 per machine hour
Depreciation          $800

Based on these cost formulas, the total overhead cost at 600 machine hours is expected to be:

A)    $4,500. C)    $5,620.
B)    $5,200. D)    $5,340.

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Accounting Basics: Total overhead cost at machine hours
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