Question

Baj Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from the beginning of the year $ 534,000 Estimated activity level from the beginning of the year 30,000machine-hours Actual total fixed manufacturing overhead $ 487,000 Actual activity level 27,400machine-hours The predetermined overhead rate per machine-hour would be closest to:__________
A) $17.80
B) $19.49
C) $16.23
D) $17.77

Answer 1

Answer:

A) $17.80

Explanation:

The computation of the predetermined overhead rate per machine hour is shown below:

= Estimated total fixed manufacturing overhead from the beginning of the year ÷ estimated activity level from the beginning year machine hours

= $534,000 ÷30,000 machine hours

= $17.80

We simply applied the above formula so that the predetermined overhead rate could come