Question

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $345,675 for the year, and machine usage is estimated at 125,700 hours. For the year, $372,125 of overhead costs are incurred and 131,500 hours are used. (a) Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.) Manufacturing overhead rate $enter a dollar amount rounded to 2 decimal places per machine hour

Answer 1

Answer:

Predetermined manufacturing overhead rate= $2.75 per machine hour

Explanation:

Giving the following information:

Overhead costs are estimated to total $345,675 for the year, and machine usage is estimated at 125,700 hours.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 345,675/125,700

Predetermined manufacturing overhead rate= $2.75 per machine hour