Question

Custom Engines Company has the following estimated costs for the upcoming​ year:

Direct labor costs $ 62,900
Direct materials used $ 25,900
Salary of factory supervisor $ 37,000
Sales commissions $ 8,800
Heating and lighting costs for factory $ 22,300
Depreciation on factory equipment $ 5,600
Advertising expense $ 33,400
The company estimates that 1,800 direct labor hours will be worked in the upcoming​ year, while 2,900 machine hours will be used during the year. The predetermined manufacturing overhead rate per machine hour is closest to​:_________ (Round your final answer to the nearest whole​ dollar.)
A. $78
B. $42.
C. $24.
D. $26

Answer 1

$22

Step-by-step explanation:

The computation of the predetermined manufacturing overhead rate per hour is shown below:

= Total Factory overhead ÷ Estimated labor hours

where,

Total factory overhead is

= Salary of factory supervisor + Heating and lighting costs for factory + Depreciation on factory equipment

= $37,000 + $22,300 + $5,600

= $64,900

And, the machine hours is 2.900

So, the predetermined overhead rate is

= $64,900 ÷ 2,900

= $22

This is the answer but the same is not given in the options