A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

The following data pertain to operations for the most recent period:

-The predetermined overhead rate is closest to:
A)$21.90 per hour
B)$21.80 per hour
C)$21.16 per hour
D)$21.26 per hour

Question

A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

The following data pertain to operations for the most recent period:
A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: -The predetermined overhead rate is closest to: A) $21.90 per hour B) $21.80 per hour C) $21.16 per hour D) $21.26 per hour

-The predetermined overhead rate is closest to:

The following data pertain to operations for the most recent period:

-The predetermined overhead rate is closest to:
A)$21.90 per hour 
B)$21.80 per hour 
C)$21.16 per hour 
D)$21.26 per hour

Quizplus · Accepted Answer

The predetermined overhead rate is closest to $21.90 per hour. This is calculated by dividing the total estimated overhead costs by the total estimated activity level. In this case, the total estimated overhead costs are $1,095,000 and the total estimated activity level is 50,000 hours. Therefore, the predetermined overhead rate is $1,095,000 / 50,000 hours = $21.90 per hour.

A Furniture Manufacturer Uses a Standard Costing System in Which