Question

Buker 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 74,000 Estimated variable manufacturing overhead $ 7.67 per machine-hour Estimated total fixed manufacturing overhead $ 1,630,960 The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Answer:

29.71 per machine-hour

Explanation:

Buker corporation has an estimated machine hours of 74,000

The estimated variable manufacturing overhead is 7.67 per-machine hour

The estimated total fixed manufacturing overhead is $1,630,960

The first step is to calculate the estimated overhead cost

= (74,000×7.67) + $1,630,960

= 567,580 + $1,630,960

= $2,198,540

Therefore, the predetermined overhead rate can be calculated as follows

Predetermined Overhead rate= Estimated manufacturing overhead cost/Estimated machine hours allocated

= $2,198,540/74,000

= 29.71 per machine-hour

Hence predetermined overhead rate for the recently completed year was closest to 29.71 per machine-hour