dearden corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. the company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $144,000, variable manufacturing overhead of $2.00 per machine-hour, and 60,000 machine-hours. the predetermined overhead rate is closest to

multiple choice

$2.40 per machine-hour

$0.40 per machine-hour

$2.00 per machine-hour

$4.40 per machine-hour

Question

dearden corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. the company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $144,000, variable manufacturing overhead of $2.00 per machine-hour, and 60,000 machine-hours. the predetermined overhead rate is closest to

multiple choice

$2.40 per machine-hour

$0.40 per machine-hour

$2.00 per machine-hour

$4.40 per machine-hour

multiple choice

$2.40 per machine-hour

$0.40 per machine-hour

$2.00 per machine-hour

$4.40 per machine-hour

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "quick" ], "needs_drawing": false, "concepts_used": [ "Predetermined Overhead Rate" ], "new_concepts": [], "current_concepts": [ "Predetermined Overhead Rate", "Fixed Manufacturing Overhead", "Variable Cost Behavior" ] } ## Calculate total estimated manufacturing overhead cost $$ \begin{aligned} \text{Total Fixed Manufacturing Overhead} &= \$144,000 \ \text{Variable Manufacturing Overhead Rate} &= \$2.00 \text{ per machine-hour} \ \text{Estimated Machine-Hours} &= 60,000 \text{ hours} \ \text{Total Estimated Variable Overhead} &= 60,000 \times \$2.00 = \$120,000 \ \text{Total Estimated Manufacturing Overhead} &= \$144,000 + \$120,000 = \$264,000 \end{aligned} $$ ## Calculate predetermined overhead rate $$ \begin{aligned} \text{Predetermined Overhead Rate} &= \frac{\text{Total Estimated Manufacturing Overhead}}{\text{Estimated Machine-Hours}} \ &= \frac{\$264,000}{60,000 \text{ hours}} \ &= \$4.40 \text{ per machine-hour} \end{aligned} $$

(A) $2.40 per machine-hour

(B) $0.40 per machine-hour

(C) $2.00 per machine-hour

(D) $4.40 per machine-hour

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Accounting", "Predetermined Overhead Rate" ] }

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Calculate total estimated manufacturing overhead cost

Calculate predetermined overhead rate

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