Question

Sister Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: Estimates made at the beginning of the year: Estimated machine-hours 37,100 Estimated variable manufacturing overhead $ 5.78 per machine-hour Estimated total fixed manufacturing overhead $ 1,108,919 Actual machine-hours for the year 34,600 The predetermined overhead rate for the recently completed year was closest to:

Answer 1

$35.67 per machine hour

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = Fixed predetermined overhead rate + variable predetermined overhead rate

where,

Fixed predetermine overhead rate = Estimated total fixed manufacturing overhead ÷ Estimated machine hour

= $1,108,919 ÷ 37,100 machine hours

= $29.89 per machine hour

And, the Estimated variable manufacturing overhead is $5.78 per machine-hour

So, the Total predetermine overhead rate is

= $29.89 + $5.78

= $35.67 per machine hour