Asked by Siqian Chang on Jul 03, 2024
Verified
The predetermined overhead rate for the Casting Department is closest to:
A) $9.40 per machine-hour
B) $7.60 per machine-hour
C) $1.80 per machine-hour
D) $31.96 per machine-hour
Predetermined Overhead Rate
An estimated rate used to assign manufacturing overhead costs to products, calculated before the costs are actually incurred.
Casting Department
A specific section within a manufacturing facility where metal casting processes take place, such as melting and shaping metals into desired forms.
Machine-Hour
A unit of measure representing the operation of one machine for one hour, used in cost accounting to allocate expenses to products based on the time machines are used in their production.
- Understand and calculate predetermined overhead rates using machine-hours as the allocation base.
- Calculate predetermined overhead rates for different departments based on direct labor-hours or machine-hours.
Verified Answer
= $129,200 + ($1.80 per machine-hour × 17,000 machine-hours)
= $129,200 +$30,600 = $159,800
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $159,800 ÷ 17,000 machine-hours = $9.40 per machine-hour
Learning Objectives
- Understand and calculate predetermined overhead rates using machine-hours as the allocation base.
- Calculate predetermined overhead rates for different departments based on direct labor-hours or machine-hours.
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