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6 November, 10:02

In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to raw materials dollars. direct labor hours. machine hours. indirect labor dollars.

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  1. 6 November, 11:02
    machine hours


    The formula to compute the predetermined overhead rate is shown below:

    Predetermined overhead rate = (Total estimated manufacturing overhead) : (estimated direct labor-hours or estimated direct labor hours)

    We simply divided the total estimated manufacturing overhead by the activity base

    So in the given situation, since the automated manufacturing operations wants to calculate the predetermined overhead rate so they choose the machine hours as the number of machines are used.
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