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 6,200 machine-hours, the predetermined overhead rate would be:
A) $520.00 per machine-hour
B) $5.20 per machine-hour
C) $44.24 per machine-hour
D) $39.04 per machine-hour

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity
= [$242,048 + ($5.20 per machine-hour × 6,200 machine-hours)] ÷ 6,200 machine-hours
= [$242,048 + $32,240] ÷ 6,200 machine-hours
= $274,288 ÷ 6,200 machine-hours
= $44.24 per machine-hour

Keeran Corporation Estimates That Its Variable Manufacturing Overhead Is $5