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In: Accounting

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 2 years ago
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