The predetermined overhead rate (variable and fixed)is $7.50 per machine hour,and the denominator activity level is 135,000 machine hours.If the variable portion of the predetermined overhead rate is $3.00 per machine hour,what is the budgeted fixed factory overhead for the year?
A) $30,000.
B) $607,500.
C) $405,000.
D) $1,012,500.

Question

Quizplus · Accepted Answer

The budgeted fixed factory overhead for the year can be calculated by subtracting the total variable overhead from the total overhead. The total overhead is $7.50 per machine hour for 135,000 machine hours, which equals $1,012,500. The total variable overhead is $3.00 per machine hour for 135,000 machine hours, which equals $405,000. Subtracting the variable overhead from the total gives the fixed overhead: $1,012,500 - $405,000 = $607,500.

The Predetermined Overhead Rate (Variable and Fixed)is $7