Question

Bolander Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:
Total machine-hours 70,000
Total fixed manufacturing overhead cost $294,000
Variable manufacturing overhead per machine-hour $2.30
Recently, Job M825 was completed with the following characteristics:
Number of units in the job 20
Total machine-hours 80
Direct materials $665
Direct labor cost $1,840
The predetermined overhead rate is closest to:

a. $8.80 per machine-hour
b. $6.50 per machine-hour
c. $2.30 per machine-hour
d. $4.20 per machine-hour

Answer 1

Answer:

b. $6.50 per machine-hour

Explanation:

The computation of the predetermined overhead rate is

= Total fixed manufacturing overhead cost ÷ Total machine-hours + Variable manufacturing overhead per machine-hour

= $294,000 ÷ 70,000 + $2.30

= $4.20 + $2.30

= $6.50 per machine-hour

Therefore, all the other information that is given are irrelevant. Hence, ignored it