Asked by William Burgan on Apr 28, 2024
Verified
Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: The predetermined overhead rate for the recently completed year was closest to:
A) $27.40 per machine-hour
B) $27.98 per machine-hour
C) $5.47 per machine-hour
D) $22.51 per machine-hour
Predetermined Overhead Rate
An estimated rate used to allocate manufacturing overhead costs to products based on a certain activity, such as labor hours or machine hours.
Machine-Hours
A measure of the amount of time that a machine is operating, used as a basis for allocating manufacturing overhead costs.
- Assess the pre-established overhead rate based on different foundations such as machine-hours, labor-hours, and direct labor cost.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
B
Explanation :
Predetermined overhead rate = Estimated total manufacturing overhead costs / Estimated total machine-hours
For the most recently completed year:
- Estimated total manufacturing overhead costs = $306,240 + $742,680 + $120,960 + $48,384 = $1,218,264
- Estimated total machine-hours = 41,520
Predetermined overhead rate = $1,218,264 / 41,520 = $29.33 per machine-hour
The closest option to this rate is B) $27.98 per machine-hour.
For the most recently completed year:
- Estimated total manufacturing overhead costs = $306,240 + $742,680 + $120,960 + $48,384 = $1,218,264
- Estimated total machine-hours = 41,520
Predetermined overhead rate = $1,218,264 / 41,520 = $29.33 per machine-hour
The closest option to this rate is B) $27.98 per machine-hour.
Learning Objectives
- Assess the pre-established overhead rate based on different foundations such as machine-hours, labor-hours, and direct labor cost.
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