Question

Khrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 41,000 machine-hours. The estimated variable manufacturing overhead was $4.16 per machine-hour and the estimated total fixed manufacturing overhead was $1,167,680. The predetermined overhead rate for the recently completed year was closest to: A. $32.64 per machine-hour B. $31.64 per machine-hour C. $4.16 per machine-hour D. $28.48 per machine-hour

Answer 1

Answer: A.) $32.64 per machine hour

Explanation:

Given the following :

Estimated machine hours = 41,000 machine hours

Estimated variable manufacturing overhead = $4.16 per machine hour

Estimated total fixed manufacturing overhead = $1,167,680

Total Estimated manufacturing overhead :

(Estimated total variable manufacturing overhead + Estimated total fixed manufacturing overhead)

Estimated total variable manufacturing overhead:

$4.16 × estimated hours

= $4.16 × 41,000

= $170560

Total Estimated manufacturing overhead :

$170560 + $1,167,680 = $1338240

Hence,

Predetermined overhead rate :

Total Estimated manufacturing overhead / estimated hours

= $1338240 / 41000

=$32.64