Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, what would be the predetermined overhead rate

Question

Martin Smith

Business

9 April, 13:21

Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, what would be the predetermined overhead rate

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Answers (1)

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Layne Roy · Answer 1

Estimated manufacturing overhead rate = $115.98 per machine hour

Explanation:

Giving the following information:

variable manufacturing overhead cost of $9.50 per machine-hour

The fixed manufacturing overhead = $947,672 per period.

If the denominator level of activity is 8,900 machine-hours

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = (947,672/8,900) + 9.5

Estimated manufacturing overhead rate = $115.98 per machine hour