CAF-5 · Chapter 3 · Question 4 of 10
A manufacturing company incurs a total "Machining cost pool" of Rs. 36,000. If the total machine hours utilized during the period are 22,500, what is the ABC overhead absorption rate per cost driver?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 1.60 per machine hour
Explanation
The rate per cost driver is calculated by dividing the total cost pool by the total cost driver volume. Rs. 36,000 / 22,500 machine hours = Rs. 1.60 per machine hour.
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