Question

At the beginning of the accounting period, Nutrition Incorporated estimated that total fixed overhead cost would be $50,600 and that sales volume would be 10,000 units. At the end of the accounting period actual fixed overhead cost amounted to $56,100 and actual sales volume was 11,000 units. Nutrition uses a predetermined overhead rate and a cost plus pricing model to establish its sales price. Based on this information the predetermined overhead rate is

Answer 1

$ 5.06 per unit

Step-by-step explanation:

Given data:

Estimated fixed overhead cost = $ 50600

Estimated sales volume = 10000 units

Actual fixed overhead cost = $ 56100

Actual sales volume = 11000 units

Now,

the predetermined overhead rate is given as:

Predetermined overhead rate = (Estimated Fixed Overhead Cost) / (Number of estimated sales Volume)

on substituting the values in the above formula, we get

Predetermined overhead rate = $ 50600 / 10000

or

Predetermined overhead rate = $ 5.06 per unit