Question

Zercox Corporation uses a predetermined rate to apply overhead. At the beginning of the year, Zercox estimated its overhead costs at $380,000, direct labor hours at 55,000, and machine hours at 25,000. Actual overhead costs incurred were $350,150, actual direct labor hours were 56,000, and actual machine hours were 26,000. What is Zercox's predetermined overhead rate per machine hour? (Round the answer to two decimal places) a. $6.79 b. $14.62 c. $14.00 d. $15.20

Answer 1

The correct answer is option d.

Step-by-step explanation:

The estimated overhead cost is $380,000.

The estimated direct labor hours are 55,000.

The estimated machine hours is 25,000.

The actual overhead cost incurred is $350,150.

The actual labor hour is 56,000.

The actual machine hours is 26,000.

The predetermined or estimated overhead rate per machine hour

=
`(estimated\ overhead\ cost)/(estimated\ machine\ hour)`

=
`(380,000)/(25,000)`

= $15.2