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Hibshman Corporation aces its predetermined overhead rate on the estimated machine-hours for the upcoming year
Hibshman Corporation aces its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year. the Corporation estimated the machine-hours for the upcoming year at 10.000 machine-hours. The estimated variable manufacturing overhead was 46.82 per machine-hour and the estimated total fixed manufacturing overhead was 4230.200. The predetermined overhead rate for the recently completed year was closest to:
A. 429.84 per machine-hour 29. B. 423.15 per machine-hour C. 423.02 per machine-hour
Expert Solution
Computation of Predetermined Overhead Rate:
Predetermined Overhead Rate = Estimated Total Manufacturing Overhead / Estimated Total Amount of the Allocation Base
Here,
Estimated Total Manufacturing Overhead = $230,200 + ($6.82 per machine-hour * 10,000 machine-hours) = $298,400
Predetermined Overhead Rate = $298,400 / 10,000 machine-hours = $29.84 per machine-hour
So, the correct option is A "$29.84 per machine-hour".
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