Question

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.)

Answer 1

Predetermined overhead rate= $40.38 per machine hour

Step-by-step 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