Muscato Corporation estimates that its variable manufacturing overhead is $19.00 per machine-hour and its fixed manufacturing overhead is $1,442,100 per period. If the denominator level of activity is 7,600 machine-hours, the predetermined overhead rate would be:

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity
= [$1,442,100 + ($19.00 per machine-hour × 7,600 machine-hours] ÷ 7,600 machine-hours
= [$1,442,100 + $144,400] ÷ 7,600 machine-hours
= $1,586,500 ÷ 7,600 machine-hours
= $208.75 per machine-hour

Muscato Corporation Estimates That Its Variable Manufacturing Overhead Is $19