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Cavy Company estimates that the factory overhead for the following year will be $592,100. The company...

Cavy Company estimates that the factory overhead for the following year will be $592,100. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 19,100 hours.

Compute the predetermined overhead rate to apply factory overhead.
$ per machine hour

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Answer #1

Predetermined Overhead Rate = Estimated Factory Overhead / Direct Labour Hour

= $5,92,100 / 19,100 hours

= $31 per machine hour

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