Wintersmith Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $278,124 per period.
-If the denominator level of activity is 4,300 machine-hours, the predetermined overhead rate would be:
A) $76.28
B) $64.68
C) $1,160.00
D) $11.60

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the total estimated manufacturing overhead (both variable and fixed) by the denominator level of activity. Total overhead = (Variable overhead rate * Machine-hours) + Fixed overhead = ($11.60 * 4,300) + $278,124 = $49,880 + $278,124 = $328,004. Predetermined overhead rate = $328,004 / 4,300 = $76.28.

Wintersmith Corporation Estimates That Its Variable Manufacturing Overhead Is $11