Question

question 12. kingdon corporations manufacturing overhead includes $7.10 per machine-hour for variable manufacturing overhead and $207,000 per period for fixed manufacturing overhead.
required:
whats the predetermined overhead rate for the denominator level of activity of 4,600 machine-hours?

Explanation:

Step1: Calculate fixed manufacturing overhead per machine - hour

To find the fixed manufacturing overhead per machine - hour, we divide the total fixed manufacturing overhead by the number of machine - hours. The formula is $\text{Fixed overhead per machine - hour}=\frac{\text{Total fixed manufacturing overhead}}{\text{Number of machine - hours}}$.
Given that the total fixed manufacturing overhead is $\$207,000$ and the number of machine - hours is $4,600$. So, $\text{Fixed overhead per machine - hour}=\frac{207000}{4600} = 45$.

Step2: Calculate the predetermined overhead rate

The predetermined overhead rate is the sum of the variable manufacturing overhead per machine - hour and the fixed manufacturing overhead per machine - hour. The variable manufacturing overhead per machine - hour is $\$7.10$ and the fixed manufacturing overhead per machine - hour we calculated as $\$45$. So, the predetermined overhead rate $r=7.10 + 45=52.10$.

Answer:

The predetermined overhead rate is $\$52.10$ per machine - hour.