Question

Rapier Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated jointer. Additional information is provided below for the most recent month: Estimates at the beginning of the month: Estimated total fixed manufacturing overhead $ 3,819 Capacity of the jointer 190 hours Actual results: Actual total fixed manufacturing overhead $ 3,819 Actual hours of jointer use 160 hours The predetermined overhead rate based on hours at capacity is closest to:

Answer 1

Answer:

The predetermined overhead rate based on hours at capacity is closest to: $20.10 per hour.

Explanation:

Predetermined Rate = Budgeted Fixed Overheads / Budgeted Activity

                                  = $ 3,819 /  190 hours

                                  = $20.10 per hour