Caber Corporation applies manufacturing overhead on the basis of machine-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $60,600. Actual manufacturing overhead for the year amounted to $59,000 and actual machine-hours were 5,900. The company's predetermined overhead rate for the year was $10.10 per machine-hour. The predetermined overhead rate was based on how many estimated machine-hours?
A)5,783
B)6,000
C)5,900
D)5,842

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the total estimated overhead by the estimated machine hours. Therefore, the estimated machine hours can be calculated as:
Predetermined overhead rate = Total estimated overhead / Estimated machine hours
$10.10 per machine-hour = $60,600 / Estimated machine hours
Estimated machine hours = $60,600 / $10.10 per machine-hour
Estimated machine hours = 6,000
Therefore, the best choice is B) 6,000.

Caber Corporation Applies Manufacturing Overhead on the Basis of Machine-Hours