Buker Corporation:

Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: 

Estimated machine-hours: 72,500

Estimated variable manufacturing overhead: $3.30 per machine-hour

Estimated total fixed manufacturing overhead: $838,760

The predetermined overhead rate for the recently completed year was closest to:

  • $6.73
  • $9.90
  • $14.87
  • $8.64

Answer: $14.87

Rationale:

Estimated total manufacturing overhead = $838760 + ($3.30 per machine-hour x 72,500 machine-hours) = $1,078,010

Predetermined overhead rate = Estimated total manufacturing overhead / Estimated total amount of the allocation base = $1,078,010 / 72,500 machine-hours = $14.87 per machine-hour

 

 

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