Odonell Corporation estimates that its variable manufacturing overhead is $11.20 per machine-hour and its fixed manufacturing overhead is $563,640 per period. If the denominator level of activity is 6,100 machine-hours, the predetermined overhead rate would be:
A)$11.20 per machine-hour
B)$1,120.00 per machine-hour
C)$92.40 per machine-hour
D)$103.60 per machine-hour

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by adding the variable overhead per machine-hour to the fixed overhead per machine-hour (fixed overhead divided by the denominator level of activity). Thus, $11.20 + ($563,640 / 6,100) = $103.60 per machine-hour.

Odonell Corporation Estimates That Its Variable Manufacturing Overhead Is $11