Question

Buker corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. data for the upcoming year appear below: estimated machine-hours 72,900 estimated variable manufacturing overhead $3.30 per machine-hour estimated total fixed manufacturing overhead $838,790 the predetermined overhead rate for the recently completed year was closest to:

Answer 1

Estimated total manufacturing overhead=total fixed cost+total variable cost

Estimated total manufacturing overhead=838,790+3.3×72,900
=1,079,360

Predetermined oH rate=Estimated total manufacturing overhead÷Estimated total manufacturing overhead

Predetermined oH rate=1,079,360÷72,900=14.81