Dejarnette Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: The predetermined overhead rate is closest to:
A) $8.30 per machine-hour
B) $11.40 per machine-hour
C) $5.20 per machine-hour
D) $3.10 per machine-hour

Question

Dejarnette Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:  The predetermined overhead rate is closest to:
A) $8.30 per machine-hour 
B) $11.40 per machine-hour 
C) $5.20 per machine-hour 
D) $3.10 per machine-hour

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $416,000 + ($3.10 per machine-hour × 80,000 machine-hours) = $416,000 + $248,000 = $664,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $664,000 ÷ 80,000 machine-hours = $8.30 per machine-hour

Dejarnette Corporation Uses a Job-Order Costing System with a Single