) Arabica Manufacturing uses a predetermined overhead allocation rate based on t
ID: 2458594 • Letter: #
Question
) Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours. At the beginning of the year, it estimated total manufacturing overhead costs to be $1,050,000, total number of direct labor hours to be 4,000, and total number of machine hours to be 20,000 hours. What was the predetermined overhead allocation rate? (Round your answer to the nearest cent.) A) $262.50 per machine hour B) $43.75 per direct labor hour C) $52.50 per machine hour D) $65.63 per direct labor hour
Explanation / Answer
The predetermined overhead allocation rate = Total manufacturing overhead / Total number of machine hours.
The predetermined overhead allocation rate = 1050000 / 20000
= $ 52.50 per machine hour
Conclusion:- The predetermined overhead allocation rate = $ 52.50 per machine hour. The option C) is the right answer.
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