Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours. At the beginning of the year, it estimated total manufacturing overhead costs to be $1,050,000 , total number of direct labor hours to be 5,000 , and total number of machine hours to be 26,000 hours. What was the predetermined overhead allocation rate? (Round your answer to the nearest cent.)

Question

Russell Jacobson

Business

27 May, 18:12

Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours. At the beginning of the year, it estimated total manufacturing overhead costs to be $1,050,000 , total number of direct labor hours to be 5,000 , and total number of machine hours to be 26,000 hours. What was the predetermined overhead allocation rate? (Round your answer to the nearest cent.)

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Answers (1)

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Konnor · Answer 1

Predetermined overhead rate = $40.38 per machine hour

Explanation:

Giving the following information:

Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours.

At the beginning of the year, it estimated:

Total manufacturing overhead costs to be $1,050,000 .

Total number of direct labor hours to be 5,000 .

Total number of machine hours to be 26,000 hours.

Predetermined overhead rate = total estimated overhead for the period / total amount of allocation base

Predetermined overhead rate = 1050000/26000 = $40.38 per machine hour