Question

Smith Paints allocates overhead based on machine hours. Selected data for the most recent year follow.

Estimated manufacturing overhead cost: $251,263
Actual manufacturing overhead cost: $247,924
Estimated machine hours: 20,376
Actual machine hours: 20,811
The estimates were made as of the beginning of the year, while the actual results were for the entire year.

The predetermined manufacturing overhead rate per machine hour is:

A) $12.32

B) $12.07

C) $12.18

D) $11.94

Answer 1

The predetermined manufacturing overhead rate per machine hour is $12.32.

Step-by-step explanation:

To calculate the predetermined manufacturing overhead rate per machine hour, we need to divide the estimated manufacturing overhead cost by the estimated machine hours. In this case, the estimated manufacturing overhead cost is $251,263 and the estimated machine hours are 20,376. Dividing these two values, we get:

Predetermined manufacturing overhead rate = $251,263 / 20,376 = $12.32

Therefore, the correct answer is A) $12.32.