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 22,000 machine-hours. The estimated variable manufacturing overhead was $8.65 per machine-hour and the estimated total fixed manufacturing overhead was $609,400. The predetermined overhead rate for the recently completed year was closest to:
A) $36.35 per machine-hour.
B) $27.70 per machine-hour.
C) $33.32 per machine-hour.
D) $8.65 per machine-hour.

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the total estimated manufacturing overhead by the estimated machine-hours. The total estimated manufacturing overhead is the sum of the estimated variable manufacturing overhead and the estimated total fixed manufacturing overhead. Therefore, the predetermined overhead rate for the recently completed year is:($8.65 per machine-hour x 22,000 machine-hours) + $609,400 / 22,000 machine-hours = $36.35 per machine-hour

Flambe Corporation Bases Its Predetermined Overhead Rate on the Estimated