Question

Precision Company estimates its machine-hour requirements for the four quarters to be 35,000 hours, 20,000 hours, 15,000 hours, and 30,000 hours respectively. The variable manufacturing overhead rate is $4 per machine-hour. The fixed manufacturing overhead is $50,000 per quarter, which includes $20,000 of depreciation expense. Knowledge Check 01 What is the budgeted variable manufacturing overhead for the year

Answer 1

Total estimated overhead costs for the period= $400,000

Step-by-step explanation:

Giving the following information:

Total machine-hours= 35,000 + 20,000 + 15,000 + 30,000

Total machine-hours= 100,000

Predetermined variable overhead rate= $4 per machine hour

To calculate the estimated variable overhead for the period, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

4 = total estimated overhead costs for the period / 100,000

total estimated overhead costs for the period= 100,000*4

total estimated overhead costs for the period= $400,000