Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for next year:
Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year.The predetermined overhead rate per hour will be:
A) $6.80 per machine-hour
B) $6.00 per machine-hour
C) $3.00 per machine-hour
D) $3.40 per machine-hour

Question

Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for next year:
 Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year.The predetermined overhead rate per hour will be:
A) $6.80 per machine-hour 
B) $6.00 per machine-hour 
C) $3.00 per machine-hour 
D) $3.40 per machine-hour

Quizplus · Accepted Answer

11ea7761_191d_38ed_81a5_9bf7a2bdb4d6_TB2580_00 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $3,400 ÷ 1,000 machine-hours = $3.40 per machine-hour

Reamer Corporation Uses a Predetermined Overhead Rate Based on Machine-Hours