Question

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $309,680 for the year, and machine usage is estimated at 126,400 hours. For the year, $385,530 of overhead costs are incurred and 131,400 hours are used. Collapse question part (a) Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.)

Answer 1

Answer:

$2.45 per machine hour

Explanation:

The computation of the manufacturing overhead rate is given below:

Given that

Overhead costs are expected = $309,680

Estimated machine usage = $126,400 hours

By using the above information, the manufacturing overhead rate is

= Expected overhead cost ÷ Estimated machine usage

= $309,680 ÷ 126,400

= $2.45 per machine hour