Question

Carter Corp. applies Manufacturing OH on the basis of Machine Hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $135,850. Actual manufacturing overhead for the year amounted to $145,000 and actual machine hours were 5,660. The company's predetermined overhead rate for the tear was $24.70 per machine hour.

The predetermined overhead rate was based on how many estimated machine hours?

A) 6,081
B)5,870
C) 5,500
D)5,660

Answer 1

The predetermined overhead rate of $24.70 was based on an estimate of 5,500 machine hours, making option C) the correct answer.

Step-by-step explanation:

The student question pertains to determining the estimated machine hours on which the predetermined overhead rate was based for Carter Corp. The company's predetermined overhead rate was $24.70 per machine hour, with total estimated overhead at the beginning of the year being $135,850.

To find the estimated machine hours, you use the formula:

Estimated Machine Hours = Total Estimated Overhead / Predetermined Overhead Rate

Applying the given numbers:

Estimated Machine Hours = $135,850 / $24.70 per machine hour = 5,500 machine hours

Therefore, the correct answer is C) 5,500. The predetermined overhead rate was based on an estimate of 5,500 machine hours.