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

Mustafa Authoy · Accepted Answer

Final Answer : B, Explanation :  The predetermined overhead rate formula is:Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total machine-hoursFrom 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-hourThe closest answer option to this is B) $27.13 per machine-hour.

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