Question

SPL Enterprises assigns overhead based on number of machine hours. For the upcoming year, they plan to use a total of 250,000 machine hours and 50,000 direct labor hours. Total overhead cost is expected to be $500,000. The predetermined overhead rate per machine hour is $

Answer 1

Answer:

Predetermined overhead rate for machine hour = $2

Explanation:

We know,

predetermined overhead rate for machine hour = $\frac{total overhead cost}{total machine hour }$

Given,

Total overhead cost = $500,000

Total machine hours = 250,000

Putting the values into the formula, we can get $\frac{500,000}{250,000}$

predetermined overhead rate for machine hour = $2

We know the predetermined overhead rate is calculated to determine the estimated cost of manufacturing overhead or indirect cost to various cost pools.