Question

Gilchrist 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 Corporation estimated the machine-hours for the upcoming year at 79,000 machine-hours. The estimated variable manufacturing overhead was $7.38 per machine-hour and the estimated total fixed manufacturing overhead was $2,347,090. The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Predetermined OH rate is $37.09

Step-by-step explanation:

Firstly, we need to get the value for predetermined Fixed OH rate.

Predetermined Fixed OH rate = Estimated Fixed overhead / Estimated machine hours

= $2,347,090 / 79,000

= $29.71 per machine hour

Predetermined OH rate = Predetermined Fixed OH rate + Predetermined Variable OH rate

= $29.71 + $7.38

= $37.09

Therefore, the predetermined OH rate is $37.09