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Margaret [11]
3 years ago
11

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for

the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?
Business
1 answer:
bezimeni [28]3 years ago
6 0

Answer:

The answer is: The predetermined overhead rate is $10 per machine hour.

Explanation:

We must first determine the total overhead cost:

total overhead = fixed overhead cost + (variable overhead x machine hours)

total overhead = $300,000 + ($4 x 50,000) = $500,000

To get the predetermined overhead cost we divide the total overhead cost over the estimated machine hours.

Predetermined overhead cost = $500,000 / 50,000 = $10 per machine hour

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