Question

Flambe Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the machine-hours for the upcoming year at 23,400 machine-hours. The estimated variable manufacturing overhead was $10.75 per machine-hour and the estimated total fixed manufacturing overhead was $648,180. The predetermined overhead rate for the recently completed year was closest to

Answer 1

$38.45

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

= Estimated variable manufacturing overhead per machine hour + estimated fixed manufacturing overhead per machine hour

where,

Estimated variable manufacturing overhead = $10.75

Estimated fixed manufacturing overhead is

= $648,180 ÷ 23,400 machine hours

= $27.70

So, the predetermined overhead rate is $38.45