Question

Hibshman 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 15,000 machine-hours. The estimated variable manufacturing overhead was $7.36 per machine-hour and the estimated total fixed manufacturing overhead was $249,200. The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Estimated manufacturing overhead rate= $23.973 per machine-hour.

Step-by-step explanation:

Giving the following information:

Estimated total machine-hours= 15,000

The estimated variable manufacturing overhead was $7.36 per machine-hour.

The estimated total fixed manufacturing overhead was $249,200.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

Estimated manufacturing overhead rate= (249,200/15,000) + 7.36

Estimated manufacturing overhead rate= $23.973 per machine-hour.