Sheeder Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $18.70 per machine-hour and fixed manufacturing overhead cost of $1,817,202 per period. If the denominator level of activity is 8,200 machine-hours, the fixed element in the predetermined overhead rate would be:
A) $18.70
B) $1,870.00
C) $240.31
D) $221.61

Question

Quizplus · Accepted Answer

The fixed element in the predetermined overhead rate is calculated by dividing the total fixed manufacturing overhead cost by the denominator level of activity: $1,817,202 / 8,200 machine-hours = $221.61 per machine-hour.

Sheeder Corporation Bases Its Predetermined Overhead Rate on Variable Manufacturing