A company has the following budgeted financial data for next year:
Manufacturing overhead $130,000
Practical capacity machine hours 10,000
Master budget capacity machine hours 6,500
The company chooses NOT to assign unused capacity costs to inventory units for internal reporting purposes.
A. Determine predetermined allocation rate that should be used to assign manufacturing overhead to inventory units next year for internal reporting purposes.
B. Determine cost of unused capacity for next year.