Smith Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost $250,000
Actual manufacturing overhead cost $230,000
Estimated machine hours 20,000
Actual machine hours 21,000
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The predetermined manufacturing overhead rate per machine hour is closest to:___________.

Respuesta :

Answer:

Estimated manufacturing overhead rate= $12.5 per machine-hours

Explanation:

Giving the following information:

Estimated manufacturing overhead cost $250,000

Estimated machine hours 20,000

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

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

Estimated manufacturing overhead rate= 250,000/20,000

Estimated manufacturing overhead rate= $12.5 per machine-hours

The estimated manufacturing overhead rate is $12.5 per machine hour.

What is manufacturing overhead rate?

Overhead production rate is the average factory cost per unit of production. This information is used in accrual-based accounting calculations to allocate factory costs in addition to units sold and units stored in inventory.

As per the information, we need to calculate the predetermined manufacturing overhead rate per machine hour.

[tex]\rm\,Estimated \,Manufacturing\, Overhead \,Cost = \$250,000\\\\\rm\, Estimated\, Machine\,Hours = 20,000 \,Hours[/tex]

[tex]\rm\,Estimated\,Manufacturing\,Overhead\,rate=\dfrac{Total \; Estimated \,Overhead \; Costs \;for \; the \; Period}{Total \;Amount \;of \;Allocation \;Base}[/tex]

[tex]\rm\,Estimated\,Manufacturing\,Overhead\,rate=\dfrac{250,000}{20,000}\\\\\rm\,Estimated\,Manufacturing\,Overhead\,rate= \$\,12.5 \,Per\,Machine\,Hour[/tex]

Hence, The predetermined manufacturing overhead rate per machine hour is closest to $12.5.

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