Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: The predetermined overhead rate for the recently completed year was closest to:
A) $25.37 per machine-hour
B) $27.13 per machine-hour
C) $6.76 per machine-hour
D) $20.37 per machine-hour

Question

Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below:  The predetermined overhead rate for the recently completed year was closest to:
A) $25.37 per machine-hour 
B) $27.13 per machine-hour 
C) $6.76 per machine-hour 
D) $20.37 per machine-hour

Quizplus · Accepted Answer

The predetermined overhead rate formula is:
Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total machine-hours

From the table given, the estimated total manufacturing overhead cost for the recently completed year is $329,800 and the estimated total machine-hours are 12,900.

Therefore, the predetermined overhead rate for the recently completed year is:

Predetermined overhead rate = $329,800 / 12,900 = $25.58 per machine-hour

The closest answer option to this is B) $27.13 per machine-hour.

Brothern Corporation Bases Its Predetermined Overhead Rate on the Estimated