Bolander 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: Recently, Job M825 was completed with the following characteristics:
The predetermined overhead rate is closest to:
A) $8.80 per machine-hour
B) $6.50 per machine-hour
C) $2.30 per machine-hour
D) $4.20 per machine-hour

Question

Bolander 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:  Recently, Job M825 was completed with the following characteristics:
 The predetermined overhead rate is closest to:
A) $8.80 per machine-hour 
B) $6.50 per machine-hour 
C) $2.30 per machine-hour 
D) $4.20 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) = $294,000 + ($2.30 per machine-hour × 70,000 machine-hours) = $294,000 + $161,000 = $455,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $455,000 ÷ 70,000 machine-hours = $6.50 per machine-hour

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