Recht Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.30 per machine-hour and fixed manufacturing overhead cost of $17,940 per period.If the denominator level of activity is 1,200 machine-hours,the fixed element in the predetermined overhead rate would be:
A) $14.95
B) $930.00
C) $24.25
D) $9.30

Question

Quizplus · Accepted Answer

Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $17,940 ÷ 1,200 machine-hours = $14.95 per machine-hour

Recht Corporation Bases Its Predetermined Overhead Rate on Variable Manufacturing