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 1,100 machine-hours, the predetermined overhead rate would be:
A)$960.00 per machine-hour
B)$9.60 per machine-hour
C)$13.30 per machine-hour
D)$22.90 per machine-hour

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the total estimated manufacturing overhead (variable plus fixed) by the denominator level of activity. Total overhead = ($11.20 * 1,100) + $563,640 = $576,000. The rate is $576,000 / 1,100 = $22.90 per machine-hour.

Odonell Corporation Estimates That Its Variable Manufacturing Overhead Is $11