Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period.
-If the denominator level of activity is 4,400 machine-hours, the predetermined overhead rate would be:
A) $67.94
B) $79.54
C) $1,160.00
D) $11.60

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by adding the variable and fixed manufacturing overhead and dividing it by the denominator level of activity.

Predetermined overhead rate = (Variable manufacturing overhead + Fixed manufacturing overhead) / Denominator level of activity 
Predetermined overhead rate = ($11.60 per machine-hour x 4,400 machine-hours) + $298,936 / 4,400 machine-hours 
Predetermined overhead rate = $51,040 + $298,936 / 4,400 machine-hours 
Predetermined overhead rate = $349,976 / 4,400 machine-hours 
Predetermined overhead rate = $79.54 per machine-hour

Therefore, the answer is B) $79.54.

Wolle Corporation Estimates That Its Variable Manufacturing Overhead Is $11