$32.55 per machine-hour $31.55 per machine-hour $4.47 per machine-hour $28.08 pe

Question

$32.55 per machine-hour

$31.55 per machine-hour

$4.47 per machine-hour

$28.08 per machine-hour

Gilchrist Corporation bases 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 28,100 machine-hours. The estimated variable manufacturing overhead was $4.47 per machine-hour and the estimated total fixed manufacturing overhead was $789,048. The predetermined overhead rate for the recently completed year was closest to:

Explanation / Answer

Option A. $32.55 per machine-hour

1. Computation of predetermined overhead rate

Predetermined overhead rate = Estimated Variable Manufacutirng OH per Machine Hour + (Estimated Fixed Manufacturing OH / Estimated Machine Hour)

Predetermined overhead rate = $4.47 + ($789048 / 28100)

Predetermined overhead rate = $4.47 + $28.08

Predetermined overhead rate = $32.55 per Machine Hour

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