Question

The estimated allocation base is 25,000 machine hours, and the estimated total manufacturing overhead cost is $71,500. The predetermined overhead rate to be applied to the jobs is:

a) -$2.86 per job
b) $0.35 per machine hour
c) -$2.86 per machine hour
d) None of the above

Answer 1

The predetermined overhead rate to be applied to the jobs is $2.86 per machine hour.

Step-by-step explanation:

The question is related to calculating the predetermined overhead rate which is a common practice in managerial accounting, specifically in cost accounting and job-order costing. The predetermined overhead rate can be calculated by dividing the estimated total manufacturing overhead cost by the estimated allocation base. To find the predetermined overhead rate, you divide the estimated total manufacturing overhead cost by the estimated allocation base of machine hours. With an estimated total manufacturing overhead cost of $71,500 and an estimated allocation base of 25,000 machine hours, the calculation is $71,500 ÷ 25,000 machine hours, which equals $2.86 per machine hour.