Homer and Donuts Corporation bases its predetermined overhead rate on the estima

Question

Homer and Donuts Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated direct labor hours…………………… 750 hours Actual direct labor hours………………………. 580 hours Estimated machine hours………………………. 50,000 hours Actual machine hours………………………….. 61,250 hours Estimated variable manufacturing overhead…... $6.32 per machine hour Estimated total fixed manufacturing overhead… $758,000 The predetermined overhead rate for the recently completed year was closest to:

Explanation / Answer

Statement showing computations Particulars Amount Estimated Machine hours              50,000.00 Estimated total fixed manufacturing overhead            758,000.00 Predetermined fixed Overhead rate = 758,000/50,000                      15.16 Variable Overehad Rate                         6.32 Total Overhead rate = 15.16 + 6.32                      21.48

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