6 Giannitti Corporation bases its predetermined overhead rat

6 Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: 73,000 3.30 per machine-hour Estinated machine-hours Estinated variable manufacturing overhead Estinated total fixed manufacturing overhead $838,730 The predetermined overhead rate for the recently completed year was closest to: Multiple Choice $676 per machine-hour $8.70 per machine-hour $14.79 per machine-hour

Solution

6. Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated Machine Hours

= $ 1,079,630 / 73,000 machine hours

= $ 14.79

Hence the correct answer is $ 14.79 per machine hour

Note :

1. Estimated Manufacturing Overhead = Estimated Fixed Manufacturing Overhead + Estimated Variable Manufacturing Overhead

= $ 838,730 + (3.30 per machine hour * 73,000 machine hours)

= $ 838,730 + 240,900

= $ 1,079,630

7. Overhead Cost applied = 70% * Direct Labor Cost

$ 15,540 = 70% * Direct Labor Cost

Hence, Direct Labor Cost = $ 15,540 /70%

= $ 22,200

Hence the correct answer is $ 22,200