Question

Strong company applies overhead based on machine hours. at the beginning of 20x1, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. by 20x1 year-end, actual overhead totaled $525,000, and actual machine hours were 25,000. on the basis of this information, the 20x1 predetermined overhead rate was:

Answer 1

Hi there

predetermined overhead rate =
estimated manufacturing overhead ÷
estimated machine hours
So
predetermined overhead rate =
500,000÷20,000=25 per machine hour

Good luck!