Question

Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: Estimates made at the beginning of the year: Estimated machine-hours 34,200 Estimated variable manufacturing overhead $ 6.21 per machine-hour Estimated total fixed manufacturing overhead $ 1,006,164 Actual machine-hours for the year 32,000 The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Answer:

$35.63

Explanation:

The formula for predetermined overhead ate is

= Predetermined fixed overhead rate ÷ Predetermined variable overhead rate

Where;

Predetermined fixed overhead rate = (Fixed overhead cost ÷ Estimated direct labor)

= $1,006,164 ÷ 34,200

= $29.42

But the predetermined variable overhead is $6.21 per machine hour

Therefore, the predetermined overhead rate is

= $29.42 + $6.21

= $35.63