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Billa Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $11.70 per machine-hour and fixed manufacturing overhead cost of $341,596 per period.If the denominator level of activity is 4,700 machine-hours, the predetermined overhead rate would be:
A) $11.70
B) $72.68
C) $84.38
D) $1,170.00
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead to individual jobs or units based on a consistent formula.
Machine-Hour
A unit of measure representing the operation of a machine for one hour, often used in allocating manufacturing overhead costs.
Variable Overhead
Costs of overhead that vary with the level of production activity, such as utilities for machinery or materials handling expenses.
- Utilize the assigned overhead rate in calculating costs.
- Delineate the differences between the fixed and variable aspects of the predetermined overhead rate.
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Learning Objectives
- Utilize the assigned overhead rate in calculating costs.
- Delineate the differences between the fixed and variable aspects of the predetermined overhead rate.
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