Keeran Corporation estimates that its variable manufacturing overhead is $5.20 per machine-hour and its fixed manufacturing overhead is $242,048 per period. If the denominator level of activity is 6,100 machine-hours, the fixed component in the predetermined overhead rate would be:
A) $520.00 per machine-hour
B) $39.68 per machine-hour
C) $5.20 per machine-hour
D) $44.88 per machine-hour

Question

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = Estimated total fixed manufacturing overhead ÷ Denominator level of activity = $242,048 ÷ 6,100 machine-hours = $39.68 per machine-hour

Keeran Corporation Estimates That Its Variable Manufacturing Overhead Is $5