What is the company's current predetermined overhead rate?
A)$9.06
B)$56.63
C)$22.65
D)$37.75

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated total manufacturing overhead cost by the estimated total amount of the allocation base. Therefore, to calculate the predetermined overhead rate we have to divide the estimated overhead cost for the year ($1,133,333) by the estimated total amount of the allocation base (50,000 machine-hours). So, predetermined overhead rate = $1,133,333 ÷ 50,000 = $22.65 per machine-hour. Therefore, the current predetermined overhead rate is $22.65.

What Is the Company's Current Predetermined Overhead Rate