Question

Doug Pederson Corporation bases its predetermined overhead rate on machine-hours. Data for 2017 appear below: Estimated machine-hours 73,000 Estimated total manufacturing overhead $1,057,730 Actual machine-hours 74,900 Actual total manufacturing overhead $1,147,000 The predetermined overhead rate for 2017 was closest to:

Answer 1

Predetermined overhead Absorption rate = $14.5 per machine hour

Step-by-step explanation

Predetermined Overhead absorption rate(POAR) = Estimate overhead /Estimated machine hours

Estimated overhead = $1,057,730

Estimated machine hours =73,000 hours

Overhead absorption rate = $1,057,730/73,000 hours =$14.48 per machine hour

Predetermined overhead Absorption rate = $14.5 per machine hour