Question

Coronado Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $294,400 for the year, and machine usage is estimated at 128,000 hours.

For the year, $313,230 of overhead costs are incurred and 130,100 hours are used.
Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.)
Manufacturing overhead rate $ ___ per machine hour

Answer 1

The manufacturing overhead rate is calculated by dividing the total estimated overhead costs by the estimated machine hours. For Coronado Company, that rate is $2.30 per machine hour.

Step-by-step explanation:

To compute the manufacturing overhead rate for the year, we need to divide the total estimated overhead costs by the estimated machine hours used. The formula to calculate the overhead rate is Total Estimated Overhead Costs / Estimated Machine Hours. Using the information given:

Total Estimated Overhead Costs: $294,400
Estimated Machine Hours: 128,000 hours

Now, perform the calculation:

$294,400 / 128,000 hours = $2.30 per machine hour

Thus, the manufacturing overhead rate is $2.30 per machine hour.