George\'s Chemicals allocates overhead based on machine hours. Selected data for

Question

George's Chemicals allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated manufacturing overhead cost Actual manufacturing overhead cost Estimated machine hours Actual machine hours The estimates were made as of the beginning of the year, while the actual results were for the entire year. $235,400 $244,700 20,700 22,500 The predetermined manufacturing overhead rate per machine hour is closest to (Round your answer to the nearest cent) O A. $11.82 O B. $0.96 O C. $10.88. O D. $11.37

Explanation / Answer

Option (D). $11.37

Predetermined manufacturing overhead rate per machine hour

=estimated MOC/Estimated MH

here, MOC (Manufacturing overhead coast), MH (Machine hour).

=235,400/20700

=11.37

Hence predetermined manufacturing overhead rate per machine hour is $11.37.

We took estimated MOC and estimated MH because Manager would to know about their system performance before end of the period whether we are performing well or not, If actual MOC and actual MH used in calculation then seasonal fluctuation and factor affect. Manager calculate predetermined manufacturing overhead rate/cost using estimate for the coming year and most important thing is that Predetermined manufacturing overhead rate is for record keeping.

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