Question

Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below:

Estimated machine-hours 72,700
Estimated variable manufacturing overhead $ 3.30 per machine-hour
Estimated total fixed manufacturing overhead $ 838,730
The predetermined overhead rate for the recently completed year was closest to: _____-

A. $6.74 per machine-hour
B. $9.90 per machine-hour
C. $14.84 per machine-hour
D. $8.67 per machine-hour

Answer 1

C. $14.84 per machine-hour

Step-by-step explanation:

The formula is shown below:

Predetermined overhead rate = (Total estimated fixed manufacturing overhead) ÷ (estimated machine hours)

= $838,730 ÷ 72,700 hours

= $11.54

And, the Estimated variable manufacturing overhead would be $3.30 per machine hour

So, the total predetermined overhead rate would be

= $11.54 + $3.30

= $14.84 per machine hour