Question

Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours 72,900 Estimated variable manufacturing overhead $ 3.20 per machine-hour Estimated total fixed manufacturing overhead $ 838,750 The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Answer:

$14.71

Explanation:

The computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated machine hours)

where,

Total estimated manufacturing overhead is

= Estimated total fixed overhead manufacturing overhead + Estimated variable manufacturing overhead × estimated machine hours

= $838,750 + $3.20 × 72,900 machine hours

= $838,750 + $233,280

= $1,072,030

So, the predetermined overhead rate is

= $1,072,030 ÷ 72,900 machine hours

= $14.71