Question

Cavy Company estimates that the factory overhead for the following year will be $1,745,300. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 56,300 hours. Calculate the predetermined overhead rate to apply factory overhead. Round your answer to the nearest cent. $fill in the blank 1 per machine hour

Answer 1

$31

Step-by-step explanation:

Given the following information,

Total factory overhead costs = $1,745,300

Direct labor hours = 56,300

To calculate the predetermined manufacturing overhead rate, we will make use of the formula below;

Predetermined manufacturing overhead rate = Total estimated overhead costs for the period / Total amount of allocation base

= $1,745,300 / 56,300

= $31

Therefore, the predetermined overhead rate to apply to factory overhead is $31