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 37,200 machine-hours. The estimated variable manufacturing overhead was $5.94 per machine-hour and the estimated total fixed manufacturing overhead was $1,028,580. The predetermined overhead rate for the recently completed year was closest to:
A) $33.59 per machine-hour
B) $32.59 per machine-hour
C) $5.94 per machine-hour
D) $27.65 per machine-hour

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as follows:

Predetermined Overhead Rate = (Estimated Variable Manufacturing Overhead + Estimated Fixed Manufacturing Overhead) / Estimated Machine-Hours

= ($5.94 per machine-hour x 37,200 machine-hours) + $1,028,580 / 37,200 machine-hours

= $221,128.80 / 37,200 machine-hours

= $5.94 + $27.65

= $33.59 per machine-hour

Therefore, the closest answer is A) $33.59 per machine-hour.

Gilchrist Corporation Bases Its Predetermined Overhead Rate on the Estimated