The predetermined overhead rate (i.e., activity rate) for Activity 1 under the activity-based costing system is closest to:
A) $28.97
B) $13.17
C) $83.66
D) $24.15

Question

Quizplus · Accepted Answer

The predetermined overhead rate for Activity 1 is calculated as follows:
Predetermined overhead rate = Estimated overhead cost for Activity 1 / Estimated activity level for Activity 1
Based on the given data:
- Estimated overhead cost for Activity 1 = $197,288
- Estimated activity level for Activity 1 = 14,970 machine hours
Therefore, the predetermined overhead rate for Activity 1 = $197,288 / 14,970 = $13.17 (rounded to two decimal places).

The Predetermined Overhead Rate (I