Question

George's Chemicals allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated manufacturing overhead cost $235,300​ Actual manufacturing overhead cost $244,800​ Estimated machine hours 20,000​ Actual machine hours 22,700​ The estimates were made as of the beginning of the year, while the actual results were for the entire year. The predetermined manufacturing overhead rate per machine hour is closest to (Round your answer to the nearest cent.)

Answer 1

Overehad Rate $11.765

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

Estimated manufacturing overhead cost $235,300

Estimated machine hours 20,000

Overehad Rate $11.765

This means for every hours the machine are working, 11.76 dollars of MOH are generated.

The question if for the predeterminated rate, all the actual data is irrelevant.

Remember : The overhead rate is done by the dividision of the cost over a cost driver, which generally is labor hours or cost or machine hours.