Steele Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs.Steele Corporation has provided the following estimated costs for next year: Steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year.The predetermined overhead rate per hour will be:
A)$4.25
B)$8.00
C)$9.00
D)$10.25

Question

Steele Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs.Steele Corporation has provided the following estimated costs for next year:  Steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year.The predetermined overhead rate per hour will be:
A)$4.25 
B)$8.00 
C)$9.00 
D)$10.25

Quizplus · Accepted Answer

11ea7998_5f4f_da08_911b_9b61335d6223_TB2627_00_TB2627_00 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base
Predetermined overhead rate = $68,000 ÷ 16,000 machine-hours = $4.25 per machine-hour

Steele Corporation Uses a Predetermined Overhead Rate Based on Machine-Hours