Glasner Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $2.70 per machine-hour and fixed manufacturing overhead cost of $289,784 per period. If the denominator level of activity is 8,800 machine-hours, the variable element in the predetermined overhead rate would be:
A) $2.70
B) $35.63
C) $35.26
D) $32.93

Question

Quizplus · Accepted Answer

The variable element in the predetermined overhead rate is simply the variable manufacturing overhead cost of $2.70 per machine-hour. The fixed manufacturing overhead cost of $289,784 per period is not included in the variable element of the rate. Therefore, the correct answer is A) $2.70.

Glasner Corporation Bases Its Predetermined Overhead Rate on Variable Manufacturing