Reference no: EM132571511

Jones Company allocates manufacturing overhead based on machine hours. Each chair produced should require 3 machine hours. According to the static budget, the following is expected to incur:

1,200 machine hours per month (400 chairs x 3 hours per chair)

$6,000 in variable manufacturing overhead costs

$8,400 in fixed manufacturing overhead costs

During January, Jones Company actually used 1,100 machine hours to make 410 chairs. The company spent $5,800 in variable manufacturing overhead costs and $8,100 in fixed manufacturing overhead costs.

Question 1: What is the fixed manufacturing overhead allocation rate (to the nearest cent)?

Option 1: $7.00 per machine hour

Option 2: $5.00 per machine hour

Option 3: $6.75 per machine hour

Option 4: $4.83 per machine hour