For 2018, Franklin Manufacturing uses machineminus−hours as the only overhead costminus−allocation base. The estimated manufacturing overhead costs are $300,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $520,000 and actual machine hours are 50,000. Using job costing, the 2018 budgeted manufacturing overhead rate is . (Round the final answer to the nearest cent.)

$7.5 per machine hour

Explanation:

The computation of the budgeted manufacturing overhead rate is shown below:

The budgeted manufacturing overhead rate = Estimated manufacturing overhead costs ÷ Estimated machine hours

= $300,000 ÷ 40,000 machine hours

= $7.5 per machine hour

In order to compute the budgeted manufacturing overhead rate we simply divided the estimated manufacturing overhead costs by the estimated machine hours.

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