Question

Sally Corporation bases its predetermined overhead rate on the estimated machine- hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 10,000 machine-hours. The estimated variable manufacturing overhead was $6.82 per machine-hour and the estimated total fixed manufacturing overhead was $230,200. Sally Corporation actual manufactured overhead cost was $304,800 and it is actual machine hours was 11,000 hours. What is predetermined overhead rate for Sally Corporation? What is the manufactured applied?

Answer 1

1

Predetermined overhead rate = (Estimated Variable manufacturing overhead rate + Estimated Fixed manufacturing overhead rate)
Estimated Variable manufacturing overhead rate = $6.82
Estimated Fixed manufacturing overhead rate = (Estimated fixed manufacturing overhead / Estimated machine hours)
=> ($230200 / 10000 machine hours)
=> $23.02

So, Predetermined overhead rate = ($6.82 + $23.02)
=> $29.84 (Ans)

2

Manufacturing applied = (Predetermined overhead rate X Actual machine hours)
=> ($29.84 X 11000 hours)
=> $328240 (Ans)

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