Brothern Corporation bases its predetermined overhead rate on the estimated mach

Question

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

Estimates made at the beginning of the year:

Estimated machine-hours 37,300

Estimated variable manufacturing overhead $ 5.39 per machine-hour
Estimated total fixed manufacturing overhead $ 775,840
Actual machine-hours for the year 35,200

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

Multiple Choice

a $26.19 per machine-hour
b $5.39 per machine-hour
c $25.89 per machine-hour
d $20.80 per machine-hour

Explanation / Answer

Total overheads =(5.39*37300)+775840=$976887

Hence predetermied rate=Estimated overhead/Estimated machine hours

=$976887/37300

=26.19(A)

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