Keeran Corporation estimates that its variable manufacturing overhead is $6.50 per machine-hour and its fixed manufacturing...

Keeran Corporation estimates that its variable manufacturing overhead is $6.50 per machine-hour and its fixed manufacturing overhead is $280,080 per period. If the denominator level of activity is 7,200 machine-hours, the predetermined overhead rate would be:

Multiple Choice

$650.00 per machine-hour

$38.90 per machine-hour

$6.50 per machine-hour

$45.40 per machine-hour

Solutions

Expert Solution

Correct Answer $38.90 per machine Hour

Calculation of Predetermined Overhead rate

(A)	Fixed overheads	$ 280,080.00
(B)	Machine Hours	7200
(A/B)	Predetermined Overhead rate	$ 38.90

Predetermined overhead rate is used to allocate Fixed overheads. Variable overheads will not be added to predetermine overhead. The rate comes to $38.90 per Machine Hour

ekkarill92 answered 1 year ago

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