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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.
Problem 1: Using job costing, the 2018 actual indirect-cost rate is _____________________
a. $8.50 per machine-hour
b. $5.50 per machine-hour
c. $8.75 per machine-hour
d. $7.00 per machine-hour
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