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 72,500 Estimated variable manufacturing overhead $3.10 per machine-hour Estimated total fixed manufacturing overhead $838,790 The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Answer:

$11.57 per machine hour

Explanation:

Predetermined overhead rate is used to allocate overheads (indirect) to products / jobs or departments.

Predetermined overhead rate = Budgeted Fixed Costs / Budgeted Activity

Note : Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.

Predetermined overhead rate = $838,790/ 72,500

                                                  = $11.57 per machine hour